Managing Effective Quality Audits

© Operational Excellence Consulting. All rights reserved.
Managing
Effective
Quality
Audits

4© Operational Excellence Consulting. All rights reserved.
Program Outline
1. Principles of management system auditing
2. Conducting effective internal quality audit to
ISO 9001:2008
3. Preparing for external audits
4. Conducting supplier audits
This document is a partial preview. Full document download can be found on Flevy:
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What Are Audits Used For?
• Looking at the overall process
• Auditing conformity
• Auditing effectiveness
• Approving Suppliers / Subcontractors
• Assessing for Certification
• Investigating problems
• Way of improving
Principles of Management System Auditing

Important Terms and Definitions
• Audit Criteria – Set of policies, procedures or
requirements used as a reference against which
audit evidence is compared
• Audit Evidence – Records, statements of fact
or other information, which are relevant to the
audit criteria and verifiable

Important Terms and Definitions
• Audit Plan – description of the activities and
arrangements for an audit
• Auditee – organization being audited
• Audit client – organization or person requesting
an audit
• Competence – demonstrated personal
attributes and demonstrated ability to apply
knowledge and skills

Executing the Internal Audit
• Maintain control of the audit
• Control audit time
• Speak and ascertain from right people
• Be professional
• Be objective – look at the facts
• Observe everything
• Avoid hear-say
• Be nosey, but polite

Recording Observations
• Persons interviewed
• Location or area
observed
• Documents examined
• Records verified
• ISO clauses involved
• Process stage involved
• Compliances/Non-
compliances
• Reference of non-
compliance
• Notes on non-
conformances should be:
Simple
Crisp
Neatly worded
• Record aspect to be
followed up in next
assessment

Report to Management
• Reports should be thorough and specific
• Must be reviewed by management to be
effective

Five Principles of Auditing
1. Ethical Conduct : the foundation of
professionalism
Trust
Integrity
Confidentiality
Discretion
• These are essential to auditing

Five Principles of Auditing
4. Independence : the basis for impartiality of the
audit and objectivity of the audit conclusions
Auditors are independent of the activity being audited
and are free from bias and conflict of interest
Auditors maintain an objective state of mind
throughout the audit process to ensure that the audit
findings and conclusions will be based only on
objective evidence

Contents
• Managing the audit program
• Planning the audit
• Conducting the audit
• Reporting the audit findings
• Post-audit activities

Tips on Gaining Management Support
to the Audit Program
• Communicate the cost of audit observations
• Explain the regulatory effects of nonconforming
processes
• Educate by stating or restating management’s
role in the audit program
• Distribute audit reports to management
• Have a member of management participate in
an audit
Managing the Internal Audit

4. Monitoring and Reviewing the
Audit Program
• Monitoring and reviewing the program
• Identifying needs for corrective / preventive
action
• Identifying opportunities for improvement
Managing the Internal Audit

Planning and Preparation
• Audit Planning
• Communicating the Audit Plan
• Selection of Auditors
• Preparing for Audit
• Pre-audit Information
Planning the Internal Audit

Audit Planning
• Schedule
The audit schedule is a document that gives details of
the area, process and department to be audited during
the scheduled audit.
It also specifies dates of audit, names of auditor and
corresponding auditee area, process or department.

Auditing Techniques
• Upstream
Starting with the final process and working backwards
to the beginning
• Downstream
Starting with the first process and following the flow
• Horizontal
Across similar processes
• Mixed
Combination of Up/Down stream and horizontal

Selection of Auditors
• Based on educational qualification, industrial
experience, in-house / outside trainings and
technical knowledge of the individual
• People within the organization who have been
trained to conduct audits
• Important precaution to be taken is to ensure
that people do not audit their own area
• Auditors must treat audit as a fact finding
exercise and so should do a professional job

Preparing the Checklist of Questions
• Check which elements of the Standard apply to the area
to be audited
• Check key requirements in the document
• Check for any problems which normally are known to
occur in the process to be audited
• If necessary, ask other people for advice
• Refer to other previous audit checklists/reports
• Sequence questions in a logical way and also to permit
Plan-Do-Check-Act approach to auditing

Pre-audit Information
• Activities performed by auditee
• Site master file
• Quality Manual
• Review the layouts
• Understand the process flow
• Previous nonconformity reports for verification of
effectiveness of corrective actions

The Opening Meeting
• This is your first point of face-to-face contact with auditee
• Be punctual or you risk losing your credibility
• Each side introduces the attendees
Each auditor introduces him/her self
• Try to remember names for use during the audit – People like to
have their names remembered
• Re-confirm the agenda. Modify or change if agreed by both the
sides
• Site / departmental presentation. Make notes of important
information.
Conducting the Internal Audit

The Site / Area Tour
• A very critical part of audit
• Respect dress codes of the areas to be visited
• Do not be afraid to ask to visit controlled areas
• Allow one auditor to speak at a time
• Talk to workers during site tour
• Ensure that you understand the answers
If not ask the same question again
Ask for clarification if required

Audit Proper
• Compare and evaluate practice against the documented
QMS (Conforming? At variance?)
• Use checklists to guide you in completing the audit
• Define nonconformity where lapses of the practice
against QMS documentation might be found
• Record objective evidence(s) of the NC
• Confirm with the auditee the presence of NC
• Point out observation(s) and area(s) for improvement

Audit Using PDCA Approach
3. Are key activities and methods for achieving
objectives identified, documented and controlled?
Are plans, procedures, formula, etc. documented?
Are process and operating criteria defined?
Are responsibilities and authorities defined?

How to Handle Difficult Auditees
• Take a communication class on verbal and non-
verbal skills
• Get training on dealing with difficult people
• Understand cultural differences
• Explain to the auditee the benefit or requirement
to the company
• Ask open-ended questions from checklist
• Stop an audit during difficult situations with
auditees

The Audit Reporting Cycle
• Discuss and agree on findings
• Record findings
• Hold closing meeting
• Issue audit report
• Update records
• Agree to undertake follow-up audit, if needed
• Carry out and record results of Follow-up Audit
Reporting Internal Audit Findings

2 Types of Nonconformities
• Failure to meet one
requirement of a sub-clause
(e.g. 4.2.3c)
• Single observed lapse in
implementing one requirement
of company QMS procedures
• No preventive or corrective
actions were taken
Minor Findings (Category 2)

The Closing Meeting
• Respond to questions openly at end of the audit
• Be prepared to change your wordings or even observations
based upon facts presented by auditee(s)
• Report the overall conclusions and recommendations
• Invite comments from auditees
• Resolve any inquiries or concerns
• Obtain consensus from auditees on nonconformity reports
• Establish date of submission to auditor of corrective action
• Reiterate confidentiality

Reporting Audits
• How do we write an audit report?
Include positive points as well as deficiencies
(negative findings and observations) identified
Management must have a balanced overview of
conditions within the plant; therefore, provide them
information on areas of strength (best practices) and
areas requiring improvement
Post Audit Activities

What Happens Next?
• For the concluded audit:
Agree on the corrective actions
Agree on-site follow-up audit, if necessary
Compile the audit report and submit to Top
Management
• Review the Audit Program
• Improve the Audit Program
• Prepare for the next audit
Post Audit Activities

How to Prepare for an
External Audit
3

Define the Organization to be Audited
• Define the organization or function or product line to be
audited
Organizations may have numerous smaller component entities,
which are often separate legal entities (i.e., subsidiaries)
Determine which of these entities to include in the audit
For example, an insurance company may have several different
subsidiary components that each perform a function for the whole
organization, with one of the units providing the accounting
functions for all the other unitsThis document is a partial preview. Full document download can be found on Flevy:

Review Applicable Laws & Regulations
• Review laws and regulations applicable to the entity and
the type of audit
• Publicly traded companies must have audits and submit
them to the Securities and exchange commission. They
must also comply with the Sarbanes Oxley Act (SOX)
• Government entities must comply with applicable Office
of Management and Budget (OMB) Circulars if they
receive federal financial assistance
• There are many other laws and regulations that may be
applicable depending on the type of entity and the type
of audit

Prior to the External Audit
• Review training documentation and computer software
manuals, ensuring current information is available.
Shred outdated versions.
• Remove old paperwork from operational areas or file all
documentation. Computer printouts, empty cartons and
unfiled paperwork can clutter working areas, making the
business look inefficient and disorganized. Old
documentation also invites scrutiny; so unless the
paperwork is a necessary part of your business, shred it.This document is a partial preview. Full document download can be found on Flevy:

Prior to the External Audit
• Designate an audit guide(s) for
your organization to coordinate
the audit activities between the
external auditor and the
auditees
• Designate an alternate in case
the audit guide is not available

During the Audit Fieldwork
• The department audit guide should:
Keep the audit focused
Facilitate the audit
Keep in constant communication with the auditor
Resolve audit issues as soon as they are brought to
the department's attention
Keep all parties informed on the progress of the audit
Keep the Management Representative informed on
the progress of an external audit

Interacting with Auditors – Don’ts
for Auditees
• Assume auditors are familiar with
your organization’s quality or
financial control system
• Challenge auditors
• Show more competence in the
standard being audited
• Argue internally
• Express unfairness
• Ask for solution
• Fix non-conformities on the spot

How to Conduct a Supplier
Audit
4

Objectives of Supplier Quality Audit
• Review the supplier’s management philosophies
and practices
• Review supplier’s total quality system
• Address specific issues needing corrective
action or to review technical and service
capabilities of a supplier
• Means to understand supplier capabilities and to
drive supplier improvements as neededThis document is a partial preview. Full document download can be found on Flevy:

Key Steps for Conducting a Supplier
Quality Audit
1. Supplier audit planning and preparation
2. On-site supplier audit
3. Post audit activity

1. Supplier Audit Planning &
Preparation
• Preparation
At this stage, the supplier information already received, shall be
reviewed by the Process Audit Team in preparation for the
Process Audit.
The supplier shall prepare for the Process Audit by planning to:
Have an area free from interruptions where copies of Process audit
documentation (e.g. Quality Control Manual, organizational charts, quality
control policies, procedures, etc.) can be reviewed by the Process Audit team.
Have available, for the duration of the Process Audit the supplier's quality
representative and other appropriate personnel as required.
Have the Chief Executive Officer for the manufacturing operation available for
the pre-Process Audit and post Process Audit meetings.

1. Supplier Audit Planning &
Preparation
• Pre-audit Meeting/Visit/Discussion (continued)
Should the pre-Process Audit meeting/visit/discussion reveal that
the system described by the supplier is not adequate to meet
requirements, further activity may be postponed until such
concerns are resolved to the satisfaction of the assessor and
where applicable, the supplier.
(Company specific) questions should be addressed during the
pre-Process Audit visit/discussion.

2. On-site Supplier Audit
• Process audit activity
The Process Audit team may is divide up into interview groups, to
interview and observe elements of the supplier's process audit.
This activity shall consist of a detailed review of documented
policies, manuals and procedures with the supplier's
representatives, assessing all operations (i.e. development,
engineering, manufacturing, testing, inspection, storing, etc.) to
stated procedures.
During the actual Process Audit, a planned sequence of events is
utilized in order to insure that all quality assurance activities are
reviewed, analyzed and evaluated in accordance with the
Process Audit plan.

2. On-site Supplier Audit
• Post process audit meeting
The Process Audit team shall meet with the supplier at the end of
the Process Audit activity and present the results.
Should corrective action activity be required, time frames for
response shall be established and agreed upon.
The findings of the Process Audit team shall be provided to
supplier management at the end of this activity.
Supplier management should sign-off on findings.This document is a partial preview. Full document download can be found on Flevy:

3. Post Audit Activity
• Supplier management review and corrective action
Suppliers should respond to this report with a written corrective
action plan within 30 days of receiving the report.
A Process Audit activity is not considered complete until, the
supplier has not only identified the most effective practical
solutions to his process audit deficiencies, but also identified the
methods for implementing these solutions.
The supplier is responsible initiating corrective action necessary
to correct all findings. This includes containment, determination
of the root cause, remedial corrective action and long term action
to prevent recurrence. The supplier should determine the extent
to which the problem has affected past performance and what
would be required to correct these problems

3. Post Audit Activity
• Follow up process audit
A Follow-up Process Audit may be conducted to verify the
effectiveness and adequacy of the corrective actions that can not
be verified via phone conversation or written documentation. The
follow-up Process Audit may not require a full Process Audit team
be present and is possible to be conducted in one day by
concentrating purely on the CAR topics.
A degree of caution has to be applied when rescoring the
sections after a Follow-up Process Audit.
It should be scored in such a way that previous sections which
had failed should now score a maximum of 90% only. Otherwise
there is a danger that a Follow-up Audit could generate a 100%
score as only the corrective action items have been reviewed.

End of Presentation
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Review of Audit Requirements
8.2.2 Internal Audit (ISO 9001:2008)
• The organization shall conduct internal audits at planned
intervals to determine whether the QMS:
a. Conforms to planned arrangements to the requirements of the
standard, and the QMS requirements established by the
organization, and
b. Is effectively implemented and maintained

Review of Audit Requirements
8.2.2 Internal Audit (ISO 9001:2008)
• The management responsible for the area being audited
shall ensure that any necessary corrections and
corrective actions are taken without undue delay to
eliminate detected nonconformities and their causes
• Follow-up activities shall include verification of the
actions taken and the reporting of verification results

ISO 9001:2008 Clauses (Continued)
5.0 Management Responsibility (Continued)
5.3 Quality Policy
5.4 Planning
5.4.1 Quality Objectives
5.4.2 Quality Management System Planning
5.5 Responsibility , Authority and Communication
5.5.1 Responsibility and Authority
5.5.2 Management Representative
5.5.3 Internal Communication
5.6 Management Review
5.6.1 General
5.6.2 Review Input
5.6.3 Review Output

ISO 9001:2008 Clauses (Continued)
7.0 Product Realization (Continued)
7.5 Production and Service Provision
7.5.1 Control of Production d Service Provision
7.5.2 Validation of processes for production and Service Provision
7.5.3 Identification and Traceability
7.5.4 p y Customer Property
7.5.5 Preservation of Product
7.6 Control of monitoring and measuring Equipment

Areas of Supplier Quality Audit
• As an auditor, you should leave a supplier
quality audit with a greater understanding of at
least the following items:
Quality methodologies
Lot determinations
Tools
Improvements
Team empowerment
Sampling arrangements
Inspection process

Quality Tools
• How is the supplier monitoring its quality? One
common tool used is Statistical Process Control
(SPC) charts.
• SPC identifies an acceptable range of quality
measurements and then graphs actual
measurements both between upper and lower
limits of acceptability and outside those limits.
• Ask the supplier to show you how quality
tools are used to monitor quality.

Sampling Arrangements
• In mass production, not every unit made is
inspected.
• Ask the supplier to show you how they
choose the size and composition of
inspected samples.

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Managing Effective Quality Audits

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