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

2. 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

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

4. THREE TYPES OF QUALITY AUDITS
Process Audits
System Audits
Product Audits

5. 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.

6. 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.

7. 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.

8. 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.)

9. 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

10. 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.

11. 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...

12. 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

13. 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 .

14. 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

15. 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