QUALITY AUDITING Basic Concepts from: Arter, Dennis R. Quality Audits for Improved Performance. Milwaukee: ASQ Quality Press, 1994 & Russell, J.P. ed. dir. and Smith, Jamie L. writer; The Quality Audit Handbook. Milwaukee: ASQ Quality Press, 1997

CATEGORIES OF AUDITING COMPLIANCE AUDITS - Rules Not to be Broken - (By Nature Reactive) Tax Audits Finance Audits Regulatory Audits High Risk Audits MANAGEMENT AUDITS - Control of Resources - (By Nature Proactive) Quality Audits Environmental, Safety, & Health (ES&H) Audits Operational Audits Government Program Audits

THREE FUNDAMENTAL QUESTIONS Whether controls exist and are adequate Whether controls are being implemented Whether controls really work

THREE TYPES OF QUALITY AUDITS Process Audits System Audits Product Audits

Process Audits System Audits Verifies the Inputs, Actions, and Outputs for a Specific Activity (A portion of the Total Program). Examines the Adequacy and Effectiveness of the Process. System Audits Examines the BIGGER Picture of the Organization - the Application and Effectiveness of System Controls for Effective Management.

Product Audits An in-depth examination of a particular product to evaluate whether it conforms to product specifications, performance standards, and customer requirements. It is conducted when the product is completed and has passed the final inspection. Inspection Techniques are utilized, but the overall aspect of decision is very different. It focuses on whether the observations/findings are isolated or general and if resolution should prevent recurrence and whether opportunities for improvement exist.

OBJECTIVE EVIDENCE Information which can be proved true, based on facts obtained through observation, measurement, test, or other means [ISO 8402]. It is uninfluenced by prejudice, emotion, or bias. It may be physical, testimonial, documentary, and/or analytical.

Sources of Evidence - Forms of Data - Physical Properties Tangible Items (e.g., Markings, Software Programs, Actual Layout of Work Area, etc.) Senses Primarily Sight Hearing, Smell, & Touch Secondary Documents and Record Documents specify an action Records substantiate the action Interviews Personal Interaction (e.g., Stimulus - Response, Question - Answer, etc.) Patterns Comparisons & Relationships (e.g., Trends, Percentages, Ratios, etc.)

RELIABILITY Independent External Sources are MRT Internal sources Knowledge Obtained by: Physical Examination, Observation, Computation, OR Inspection is MRT Interview Comments Records are MRT Oral Evidence

AUDIT CHECKLIST Checklist is a method of documenting the selected control areas to be examined. Checklist is a method for organizing all of the information to be gathered. Checklist is a Set of Notes and Specific Instructions about Specific Items, Questions to Ask, & Techniques to use during the Audit.

Checklist - Questions Checklist Questions Are Not Open Ended Questions but the Individual Facts you will need to form Conclusions. They must be precise, measurable, and factual. Make them Binary, Yes - No, Acceptable - Unacceptable, Correct - In-Correct. Some Checklists are Yes/No Questions that reference a Specified Requirement, Others are Open-Ended Interview Questions that Test the Limits of the Procedure...

A Method of Developing A Checklist Flow the Process or System to be Audited Step-By-Step Develop Questions Involving the Process Elements: Methods Material Machinery Manpower Measurement Environment

METHODS of COLLECTING EVIDENCE Tracing Follow the process of something (tangible or intangible) as it is processed, or was processed. Backward Trace of Product reflects reality Forward Trace Presents “What Ifs” Interviews (Discovery) Six Step Process (next slide) Corroborate Statements Another Person States the same Another Auditor Heard the same An Item, Document, or Record Verifies the same Conflicting Evidence does not make a fact, but a conclusion can be made .

Interviewing Process Explain your purpose Find out what they are doing Put them at ease Find out what they are doing Make tentative conclusion Steps by Frank X. Brown Explain your next step Analyze what they are doing

WII - FM Relate Observations What’s In It - For Me Cost, Schedule, Grievances, Overtime, Customer Complaints, Missed Shipments Driving Forces in the lives of your intended Audience WII - FM