Bsi bip 2011 2003

What is new is that some management sy stem stand rds now spe ify c ntin al improv ement as a r eq uirement, not just an intention; and it is the sy stem itself that has to be improv ed,

Con tin u al Impr ov emen t

The Integr ated Mana ement Sy stems ( MS) ser ies of bo ks pr ov id es

pr ac ti c al gu i d an ce an d ad vi ce on in tegr ati n g the system s oper at in g wit hi n

an or gan izati on The IMS ser i es pr ovid es a fr amew ork i n to whi c h ad d i ti on al

m an agem en t systems can be i n c or porated

Each v olume is w rit en b an ac know led ed ex per t in the field The ser ies

ed itor is Dav id Smith of IMS R isk Solutions Ltd, w ho has be n inv olv ed in

w riting mana ement sy stem stand rds sinc the early 19 0s and is himself

the author of a n mber of BSI bo k s on the subje t

IMS: The Fr amewor k

IMS: Implement ing a d Oper at in

IMS: Cust omer Sat isfact ion

IMS: Cr eat in a Ma u l

IMS: Infr mat ion Se ur it y

IMS: Ma a in Fo d Safet y

IMS: Risk Ma a ement f r Go d Go er na c

IMS: The Exc lenc Model

IMS: Cont in al Impr ovement Thr oug h Audit in

Fir t publshed b BSI 2 0

© IMS R isk Solutions Ltd , 2 0

ISBN 0 5 0 4 4 8 1

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3 9 Chisw ic k High Ro d , Lond on W4 4AL

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1 The r eq u ir emen t of continu al impr ov emen t 1

1.1 Con tin u al impr ov emen t in a pr oc s -based system 3

1.2 Con tin u al impr ov emen t in r elation to the

Any org nization of any kind should se k to improv e its per ormanc all

the time No busines can plan to stand sti just as it is, be ause if it do s

it w il inev itably d eclne Ev ery one should try to red uc e their c osts, improv e

their per ormanc , increase their sales, make more profits or satis y more

customer o clents

That is obv ious, and nothing new What is new is that some management

sy stem stand rds now spe ify c ntin al improv ement as a r eq uirement,

not just an intention; and it is the sy stem itself that has to be improv ed,

not merely some aspec t of the oper ation of the busines The integr ated

management sy stem ( MS) f amew ork (se Ap endix 1) states that ‘The

organization should establsh, do ument, implement and maintain a

management sy stem and se k to c ontin ally improv e its efe tiv enes ’

(sec tion 0) I c ontinues ‘The organization should … implement actions

ne es ary to achiev e planned results and c ntin al improv ement of

these pro es es’ That is a statement of intent, but elsew here c ontin al

impr ov ement is a mandatory r eq uirement ISO 9 01:20 0 includes the

folow ing req uirement: ‘The org nization shall c ntin aly improv e the

efe tiv enes of the q ualty mana ement sy stem …’ (8.5.1) and ISO 9 0 is

entitled ‘Guid elnes for per or manc e improv ements’

ISO 14 01:19 6 requires tha t ‘T op ma na gement sha ll define the

organization’s env ir onmental polc y and ensur e that it … inc ludes a

c mmitment to c ntin al improv ement …’

The sa me a pples in the field of o cupa tiona l hea lth a nd sa fety

OHSAS 18 01:19 9 r eq uires that an or ganization’s polcy ‘shall includ e a

c mmitment to c ntin al improv ement’ (4.2)

I ma w el be asked how one c an u d er take to ac hieve c ontin al

impr ov ement in any thing S r ely if something is w or king as w el as c an

be ima ined , fur the impr ovement is not pos ible, let alone c ontin al

impr ov ement? The old ad age ‘If it ain’t br oke d on’t tr y and fix it’ sug ests

that it is not alw ay s sensible to tr y to impr ov e things That is only p r tly tr ue

No mat e how go d something is, it is alw ay s sensible to c onsid er how it

might be impr oved – in ter ms of efic ienc y o c ost o per for manc e How ever,

c hange fo c hange’s sake is never a go d id ea u les y ou ar e a poltic ian

tr y ing to leave y our mar k on the w or ld and c hanges ne d to be c ontr oled

sensibly One lar ge engine r ing c omp ny, mas pr od uc ing c onsume go d s,

w as almost br ought to a stand sti b the flo d of c hanges implemented

– d esign ofic e instr uc tions c oming out of the d esign d ep r tment mad e

lfe almost impos ible fo the pr od uc tion engine r s Simiar ly, it is not

u c ommon to hear c omplaints fr om the National Health Ser vic e, sc ho ls

and almost ev er y publc ser vic e of how they ar e hand ic ap ed b the c onstant

str eam of ‘new initiativ es’ imposed on them b gover nment d ep r tments

d esper ately anx ious to show the publc that they ar e d oing something But

that is not to sa that lo king fo w ay s to impr ov e is w r ong – impr ov ing

pr od uc ts, ser v ic es and sy stems b w hic h a busines is mana ed I is how to

ac hieve these impr ovements in pr ac tic e w hic h is the subjec t of this bo k

If a goal is to improv e a pr oduc t or serv ic , an obv ious start point is to

lo k at the way s in whic h the ex isting pr oduc t is failng to me t the ne ds of

the c ustomer, and how these shortc mings c an be remedied I may be that

the pr oduc t is to ex ensiv e, or to u relable; that hospital w aiting lsts

are to long; that scho l ex am results are u satis ac tory ; or that the

clear-up rate of crimes is u ac ceptably low Al these things can be measured , and

per ormanc e indicator c mpied, so that improv ement can be measur ed

To be able to demonstr ate that improv ement has tak en plac , some kind of

measurement is es ential if the jud ement is not to be entirely subje tiv e,

but defining meaningful per ormanc indicator is not alw ay s easy

The task may be p rticularly d ificult w hen one is c nsidering improv ement

in a mana ement sy stem Clear ly one can lo k at failur es in the sy stem,

and their elmination, just as a production sy stem can be improv ed b

reducing the n mber of reje ts, but that wi prov ide only a smal p rt of

the answer Improv ement should also be sought in a sy stem that is w orking

w el, but c ould work bet er, whic h is les easy to measure As wi be se n,

this is best ac hiev ed b an aud it sy stem w hich not only lo ks for failures, in

a negativ e fashion, but lo ks proactiv ely at how things c ould be improv ed

Any c ntr ol sy stem req uires fe d ack if it is to w ork properly, and auditing

prov ides that fe d ac k

Improv ing the proces es

So how d oes one get to gr ips w ith impr ov ing a busines ? (We use the ter m

‘busines ’ r athe than ‘or ganization’fo a n mbe of r easons I is shor ter I

ser v es as a r emind er that a hospital o sc ho l o a gov er nment d ep r tment

ar e al busines es in the sense that they ar e al se king to satisy c ustomer s

o c lients and othe stakehold er s.)

I is the pro es es in the busines es that w e are se k ing to impr ov e A

proc es is any activ ity car ried out within the busines where v alue is added

to an input to produc an output At its simplest, it c an be answering the

telephone or opening a let er Often, or inde d usually, the output fom

one pr oc s forms the input to another Hav ing opened the let er, perha s

it is ac know led ed and then p s ed to the per son w ho w il deal w ith it

Proc es es are normally planned, car ied out u der c ntr oled c nditions

(ie there are rules or pro edur es) and add v alue to the input The q uality

stand ard ISO 9 01:20 0 req uir es that the busines shall ‘identify the

proc es es ne d ed for the q ualty management sy stem and their applcation

thr oughout the or ganization’ (4.1)

A mod el of a pr oc es -b sed mana ement sy stem is i ustr ated in Figur e 1.1

This is b sed on a d ia r am in ISO 9 01 w her e it is used to i ustr ate

c ontin al impr ovement in r elation to a q ualty sy stem, but it is b no

means pec ular to pr od uc t q ualty As w il be se n, it is eq ualy a plc able to

envir onmental sy stems, to health and safety o ind eed to any mana ement

sy stem Contin al impr ov ement is a r eq uir ement fo al of them

Fig r e 1.1 Con nu l impr ovement n a pr oc s -bas d syst em

Anothe mod el fr eq uently employ ed is the Plan–Do–Che k–Act model,

w hich simi arly a ples to any mana ement sy stem This is i ustrated in

Figure 1.2

This is of u iv er al applcation at any scale, almost reminisc ent of a

f ac tal I can be appled to the busines as a w hole, to the mana ement of

a d ep rtment or fu ction, right d own to the simplest pro es Whatev er is

inv olv ed one starts of:

– plan ing w hat is to be done;

– d oing it;

– c hec king that the sy stem is w orking properly ; and

– acting to improv e it

For ex ample, this is the basic f amew ork a opted for this bo k – plan ing

how to do the audit; c arry ing out the audit; che king the r esults; and acting

to improv e the auditing sy stem

Contrary to opinions sometimes ex pres ed, the Plan–Do–Chec k–Ac t (or

PDCA) appr oach is totally c mpatible w ith a pro es -based sy stem

Fig ur e 1.2 Con nu l impr ovement n r elat ion t o t he P DCA model

Ma ag eme t

R ev iew

Perfor ma c

A ssesme tImprov eme t

• Id nt ifica t ion of aspet s a nd risks

• S let i n of sig nificnt aspe t s to

be a dese

• Obje t ivs a d t a r g ets

• Id nt ifica t ion of rsou cs

• Id nt ifica t ion of or g a niz at i n l

str uct urs, roles, rsp nsibi t ies

a d a thorities

• P la nin of o erat i n l cont rol

• Cont ingen y prpa d es for

forese a ble ev ents

• Oper a t ion control

• Ma ag eme t of h ma rsouc s

• Ma ag eme t of othe rsouc s

• Doc me tat i n a d it s cont rol

• Rev iew input

• Rev iew out put

non onformit ies

• Ma ageme t yst em a dit

If w e ar e to ac hieve impr ovement w e ne d to have a mean s of measur i ng i t

Other w ise w e d o not know w hethe w e ar e making an impr ovement o not

The standar ds talk a out ‘improv ing the sy stem’ The only purpose of

hav ing a management stand rd is to ena le the busines to do bet er

Diferent v iews of improvement

The busines ’ difer ent stakeholder w il hav e diferent v iews of what

c onstitutes improv ement in the busines

In a c mmercial busines the owner s w il, of c our e, be lo k ing fo profits

(short and long term) They w il also lo k for sec ur ity in their busines , a

positiv e cash flow and the abi ty to inv est in gr owth and improv ement

They wi want f e dom f om pr ose ution for infingements of regulations,

a go d busines reputation and to be w el regar ded b al stakeholder

Customer s w il be lo king fo the r ight pr od uc ts o ser vic es at the

r ight pr ic e at the r ight q ualty and at the r ight time fr om a busines

that r espond s to their r eq uir ements pleasantly and efic iently Ac hiev ing

c ustome satis ac tion is a majo c onsid er ation of some c omplex ity and for ms

the subjec t of a sep r ate bo k in this ser ies (IMS: Cust omer Sat isfact ion) If

w e ar e buy ing something fr om a man fac tur er o a shop w e, as c ustomer s,

know w hen w e ar e satis ied w ith the ser vic e that w e get and w hen w e ar e

not, and the ow ner s of the busines w il, o should , know w hat these c r iter ia

ar e But w ith a sc ho l, w ho ar e the c ustomer s – the pupis, o their p r ents,

o (in the c ase of a state sc ho l the author ity w ho p y s fo the sc ho l? The

answ er should be that they al ar e and al ne d to be satisied A hospital

ne d s to satis y its p tients, but also the med ic al pr ac titioner s w ho ar r anged

fo them to be ther e and in the c ase of a state hospital the author ity pr ovid ing

the fu d s An inc ome ta o V T ofic e should have go d r elations w ith the

publc , answ er q uer ies q uic kly, but also w or k at an ac c epta le level of c ost

set b the gover nment d ep r tment involved , ie w ithin their a r eed bud gets

With ever y sor t of busines the var ious ‘c ustomer s’ ma be measur ing

their satis ac tion in d ifer ent w ay s, but ac hieving c ustome satisac tion is

pr ob bly the single most impor tant thing that a busines has to d o

Employ ees ar e anothe gr oup of stakehold er s fo w hom c ontin al impr

ove-ment should be sought Ever y busines d epend s on them (ex c ept fo the sole

tr ad er ) Their employ ment should be safe and not pr esent r isks to their

health, and an oc c up tional health and safety (OH&S) sy stem is obviously

es ential, but the ne d go s fur the than this If a busines is r ated as a

go d employ er b its w or kfor c e it w il be a le to get the staf that it w ants,

staf tur nov er w il be low as w il al the as oc iated c osts of r ec r uitment

and tr aining, and the busines w il av oid the d ific ulties sustained b

po r employ er s This is not al to d o w ith lev els of p y ; inc r easingly job

satisac tion is r eg r d ed as the most impor tant fac to b employ ees

Neighbour , and soc iety at large, are another important group of

stakehold er s Whist envir onmental legislation helps to ensur e that emis ions

of al kind s (inc lud ing noise) ar e kept w ithin bou d s, the c onsid er ate

busines w il not only keep w el w ithin leg l lmits but w il make ever y

efor t to be as go d a neighbour as pos ible This is not only fo pur poses of

altr uism; the d ama e to r eputation fr om the publc ity of u soc ial behaviour

c an be ver y d ama ing

S p ler are stakeholder , to They may depend on the busines for

their lv elho d and w il be w il ng and a le to ofer a bet er serv ic e to a

busines that treats them as an ex tension of their ow n ac tiv ity than it w il

to one that treats them lke a tap to be tur ned on or of at w il

Although there are many difer ent sorts of busines , the areas in

w hich w e hav e to lo k for c ontin al impr ov ement are c mmonly shar ed

Al busines es are c nc rned with customer satis action, c sts and the

eficienc y of their operations If w e ex mine the wa that a c mmercial

busines has to tac k le these areas it wi be fou d that almost al solutions

hav e an applcation in other ar eas – publc ser v ic s, sc ho ls, and so on

Measuring performance

In a c ommer c ial busines the pr ime ind ic ato of per for manc e is pr ofit (along

w ith c ash flow ), but that is something that c an ot be ad d r es ed d ir ec tly

Pr ofit is the (usualy r elatively smal d ifer enc e betw een tw o muc h lar ge

n mber s – the inc ome fr om sales and the c osts of ac hiev ing those sales

Pr ofit c an be impr ov ed b inc r easing the one o r ed uc ing the other, o

both The ac c ou tant w il usualy know pr ec isely w hat the c onstituents of

these amou ts ar e, but it is not his/he job to sug est how they c ould be

impr ov ed – that is the fu c tion of mana ement Mana er s ne d ind ic ator s of

per for manc e to se how the busines is d oing and how it might be impr oved

The financ ial figur es ma w el not be sufic ient, o even helpful to ac hieve

this Fo ex ample, pr od uc tion mana er s w il w ant to know the volumes

of pr od uc tion r athe than their v alue, as the lat e is a fu c tion of othe

fac tor s, nota ly pr ic e, w hic h is outsid e their c ontr ol They w il w ant to know

w hethe they have mad e the r ight mix of pr od uc ts – it is no go d having a

r ec or d w eek fo pr od uc t A w hen w hat the salespe ple r ealy w anted w as

pr od uc t B, and the ac c ou ting figur es ma not show that The salesman w il

c er tainly w ant to know the value of sales, but also the mix and the pr ic es at

w hic h the sales w er e ac hiev ed – if they w er e at give-aw ay pr ic es it ma not

hav e d one the busines muc h go d

Al mana ger ne d to c nsider how per orma nc is going to be mea sured

and should a gre these mea sures with lne ma na gement These measures

ma y ha v e be n defined in the job description, but more often they a re

ex res ed in genera l terms a nd ne d to be more closely defined before

they can be measured They should be matter within a ma na ger’s

c ntrol, or at lea st matter over which the mana ger has a c nsidera ble

influenc If the figures ha v e to be prov ided b somebod else ma nager

ne d to u der tand how they a re deriv ed a nd be satis ied tha t they a re

fa ir and accurate; otherwise ea ch ma nager wi fe l the ne d to genera te

per ona l figures and much time wi be wa sted arguing about why they

are diferent Many wi have had the ex erienc of ma nagement me tings

spent a rguing about the figures rather tha n get ing rou d to discus ing

the busines ’ rea l problems

So in the prod uc tion field, fo ex ample, the production mana er ma

fe l figur es fo v olumes of output are ne es ary, the perc ntage of rejec ts

or failures, the amou t of (pr oc s ) sc rap, the c ost pe u it of output

(c mpar ed with the stand rd c st if a stand rd c sting sy stem is used),

plant uti zation and mac hine d own-time, and perhaps the la our c st pe

u it of output Mana er may want to k now how often c r e tiv e action has

be n ne es ary, how serious the pr oblems were and how q uic k ly they w ere

c or ec ted Manager w il want to ex amine w hat prev entiv e ac tion has be n

taken, and how efe tiv e it has prov ed to be, and so on

Al these r efer to a principal r esponsibi ity, for production; but there are

other responsibi ties also In the field of oc cupational health and safety

manager w il ne d to know of any ac idents or near mis es, of u safe

acts observ ed, of any health problems that hav e ar isen, and so on In the

env ironmental area mana er w il w ant to w atc h energ c onsumption,

discharges, w aste, emis ions, rec y clng or any other factor in whic h the

ac tiv ities of their area of responsibi ty impac t on the env ironment

Al this is, of c our e, nothing more than w hat mana er ’ jobs are, and

it go s w ithout say ing that they w il alw ay s be try ing to improv e things

The objec t of the cur ent ex er cise is to apply a sy stem to the busines of

impr ov ement so that we can get a handle on it and measure how a busines

is ac tualy d oing

The start, then, should be for eac h mana e to c nsider w hat per or manc e

indicator are ne es ary to measure how w el obje tiv es are being ac hiev ed,

and henc e how they are improv ing Idealy one should c onsid er v irtually

ev er y indiv id ual proc es that is c arr ied out w ithin the department, as

show n on the proc es ma (se Ap end ix 2), and identify the appr opriate

per formanc ind ic ator s and c nstr aints so that means of improv ement can

be implemented and progr es measured In practic e it may not be feasible

or ev en helpful to c onsid er eac h pr oc s sep rately at the low est lev el, but

rathe to mov e up a lev el to the point where the ov eral pro es es can be

studied I should alway s be remember ed that indiv idual pr oc s es inter act

w ith eac h othe to influenc the ov eral total pr oc s You c annot optimize

a total sy stem just b optimizing its c onstituent parts

Thr oughout the busines ther e w il be many pe ple tr y ing to impr ove

the per for manc e of the busines in many d ifer ent w ay s Pur suing the

ex ample of a man fac tur ing busines , in ad d ition to the pr od uc tion ex ample

c onsid er ed a ov e, ther e ma be:

– designer try ing to make the product bet er, cheaper, more at ractiv e,

etc;

– prod uc tion engine r s lo king for bet er methods of making the

product;

– sy stems analy sts lo king for bet e way s of w orking;

– buy er lo king fo bet er, cheaper, more se ure sup les;

– prod uc tion planner se k ing bet er plant uti zation, red uc ed stoc ks;

– w arehousing staff lo king for improv ed stoc k mana ement;

– despatc h and d elv ery staff se king bet er tr ansport uti zation and

and so on throughout the org nization

Although this ex ample is taken fr om a manufacturing busines there w il

be simiar lsts for any org nization Conside a r estaurant The chef w il

be d esigning new d ishes to appeal to the c lientele, w hist c oks wi find

the best w ay s of c oking them The restaur ant mana e w il be lo king to

improv e the bo king sy stem to tr y to ensure that the restaurant is alway s

ful w ithout k eeping diner waiting to long The buy er w il be lo king for

bet e sourc s of sup ly, and the marketing manager w il try to ensure a

regular stream of customer The ac cou tant w il be try ing to reduc the

c harges f om the credit c ard c mpanies and get ing q uicker set lements,

and so on

Othe busines es w il have d ifer ent lsts, but many of the fu c tions w il

be simiar A simple r etai shop w il be c onc er ned w ith buy ing, mar keting,

sales, staf, r etur ns, c omplaints and pr ofit A publc sec to or ganization w il

hav e the pr imar y pur pose of ser ving the c ommu ity instea of making a

pr ofit, but it w il sti w ish to per for m as w el as pos ible A hospital w il be

c onc er ned w ith the thr oughput of p tients, uti zation of fac ilties, oper ations

c anc eled o postponed , w aiting lsts, r ead mis ions, mor talty r ates, length of

sta,and so on A gover nment d ep r tment w il be lo king at the thr oughput

of w or k, the tur nar ou d of c or r espond enc e, the c osts of output, the numbe

of c omplaints, the r esponse to enq uir ies, soc ial ac c ou ta i ty (how ev er it

is measur ed ), its publc ima e, publc r elations, etc Loc al gov er nment has

muc h the same c onc er ns but is mor e d ir ec tly ac c ou ta le to its c ustomer s

in those fu c tions fo w hic h it is r esponsible and henc e w il have a r ead y

sup ly of fe d bac k on its oper ations fr om its c ustomer s

Al these things ar e es ential elements of the busines of managing, and

are nothing new What is new is that the ac tiv ity of se king improv ement

is formalized and subje t to measurement Improv ements in relation to

a p rticular proc es or ac tiv ity are measured and rec orded (pr eferably in

phy sic al rather than financ ial terms) The impac t of this on the ov eral

proc es chain can then be as es ed so that an achiev ement of c ontinual

improv ement can be demonstrated

Es a bl shing a basel ne

Before y ou can measur e improv ement y ou ne d to know y our cur ent

position, to esta lsh a b selne For ex ample, if one objec tiv e is to reply to

c or espondenc mor e q uickly, y ou ne d to know how long it is taking now

– not just the av era e time, but the wor t cases, to Perhaps a new sy stem

w il be ne ded fo trac king this so that y ou w il be able to demonstrate the

improv ement Whatev er y ou are se k ing to impr ov e y ou should esta lsh

w her e y ou start f om, whether it is answ ering let er , absente ism, scra

rates o customer c mplaints

In exercising mana ement ov er the sec tions for whic h they ar e responsible,

manager wi be using a n mber of tec hniq ues Various mana ement

sy stem standard s use terms lk e monitoring, inspe tion, measur ement,

and so on, and all these c an play a p rt w hether they are used formaly or

informally The important thing is that they ar e used proactiv ely

The fir t and basic te h iq ue is measurement As far as pos ible the

outputs of any pro es or group of pr oc s es should be ex pres ed in spec ific,

n mer ic al terms I has memor ably be n said, ‘If y ou c an’t measure it y ou

can’t c ntr ol it’ Objec tiv e d ta are alw ay s to be prefer red to subjec tiv e

asses ments, but that is not alway s pos ible In many areas, suc h as

pr oduction in factories o ex am results,there is no problem.I is les easy in

ar eas such as employ ee satis ac tion or ind ustr ial relations Blu t measures

such as d y s lost b str ikes o u fi ed v acancies can be used, but these are

all measur ements of failure, and are av ailable only when the sy stem has

faied in some wa Prev entiv e measur es w hich av oid such fai ures should

be in use I is up to mana ement to discus the problem and c me up w ith

a c onsidered v iew of the most meaningful indicator that c an be used I is

impor tant to get this right We f eq uently rea of new ‘targets’ being set

b gov er nment – for the health ser v ic , for ex ample – w her e the efec t has

be n the ex act op osite of that w hich was intended Conc ntration on that

p r ticular measure has led to a reduc d per ormanc ov er all

I is important that the c or ec t indicator are used, but at the same time

it is important that not to much ex tra burd en is imposed in producing a

lot more figures In the publc se to par ticularly there hav e be n many

c mplaints that the demand s of producing ex tra figures fo this and that

hav e impeded the busines of get ing on with the job Sc ho ls, hospitals,

loc al author ities hav e all ex r es ed their c nc rns at this tr end, and the

same is true in the priv ate se tor When c onsid ering per ormanc indicator ,

try not to demand new information if something alr ead y ex ists w hich,

although not perha s ideal, c an be ma e to prov ide the same information

Ac c ou tants often hav e figur es av aia le w hich, w ith sl ght modific ation,

can be made to serv e the purpose I is a go d idea to c arry out a surv ey

of all the returns and statistics w hich eac h department is being asked to

pr ov ide I wi f eq uently be fou d that there is a lot of duplcation, and

even that reports are sti being prod uc ed that w ere asked for y ears a o

to answer a p rticular problem at that time but the ne d has long sinc e

p s ed and no one has told them to stop A go d w ay of che king w hether

these returns are sti ne ded is to stop submit ing them, and se ing how

long it is befor e any one notic es or c mplains The grow th of paperw ork

is something that w e all c omplain about, and we should not a d to this

burden u les there is a gen ine ne d

Monitoring performance

Hav ing de ided on the measur ements that are ne ded as per ormanc

indicator , the nex t stage is to dec id e how they w il be monitor ed I is no

go d producing figur es if no one w il p y attention to them and w hat they

mean The v alue of information is only in the ac tion that we take as a result

of re eiv ing it The Tit anic rec eiv ed a mes age warning it to lo k out for

ic bergs, but bec ause no one to k any notic e the mes age might just as w el

not hav e be n sent

The primary responsibi ty for lo king at the per formanc indic ator

and learning fom them les with the mana er s of the dep rtments f om

w hom the figures emanated They are the ones who should be w atching

to se not only that perormanc standar ds are being maintained, but also

that improv ement is being ac hiev ed That is their job as a mana er But

quis cust odiet cust odie ? (Who w il guard the guardians ) The monitor ing

ne ds to be part of the ov erall busines sy stem whic h ensures that it is

ha pening and also that it is efec tiv e The managerial hierar chy should

ensure that monitoring is c arried out at eac h stage, and that notic e is taken

of the results The most efec tiv e w ay to ensure that the measurement and

monitoring sy stems are fu c tioning as they should is b sy stem audit and

subseq uent r ev iew That for ms the nex t p rt of this bo k

There are many misc nc ptions a out auditing Most of them stem

fr om the role of financ ial aud itor , w ith their reputation for lo king for

lost pen ies o making sure that a c lumn of figures has be n a ded up

c r rec tly Their fu c tion is q uite diferent f om that of a sy stem auditor

For one thing, y our ow n c omp ny auditor w ork for y our shareholder , not

y ou, (in the ry, at least) and they are responsible for ensuring that y our

shareholder can belev e the ac cou ts that they re eiv e Whist the role

and r esponsibi ties of financial aud itor hav e tended to ex pand r ec ntly in

the l ght of some wel publcized financial scand als, principally in the USA,

their fu ction remains primariy that of c hec k ing figures that ex r es or

represent amou ts of money

Auditor s of sy stems are diferent Their job is to make sure that a sy stem

that has be n defined is in fact being fol ow ed in the or ganization But

again there are a number of diferent situations

Diferent kinds ofa udit

What we ar e talk ing about in this bo k is known as fir t-party auditing

The auditor are working fo y ou, for y our organization, doing the wor k

that y ou hav e asked them to do for y our ow n benefit They are pr obably

y our ow n employ ees This is difer ent f om a se ond-p rty audit, w here

the auditor c mes into y our organization f om one of y our customer or

prospe tiv e c ustomer s to make sure that the sy stems y ou are using me t

their req uir ements Se ond-p rty aud itor are only c nc rned with the

req uirements of y our customer or clent, and w il c ho se whatev er aspe ts

of y our sy stems that they w ant to lo k at so that their employ er , y our

customer , can be assured that y our busines w il be a le to prov ide the

nec es ar y serv ic

Thir d -p r ty aud i ti ng i s som ethi ng d ifer ent a ai n This usu aly ar ises

w h en a busi nes has sou ght c er tifi c ation to a p r ti c ular stand ar d , and is

bein g as es ed fo c ompl ian c e w i th that stan d ar d The aud ito her e wil

ex min e the w hole system c ompr ehensivel y so that you c an be c er tifi c ated as

oper atin g i n c om pl ianc e w i th the stan d ar d , su c h as ISO 9 01 o ISO 14 01

Auditor ski ls

These thr ee sor ts of aud it ar e lo king to ac hieve thr ee d ifer ent things,

and the skils and know led ge ne d ed b the aud itor s ar e eq ualy d ifer ent

A thir d -p r ty aud ito is usualy as es ing the or ganization fo c omplanc e

w ith a p r tic ular mana ement sy stem stand ar d , suc h as ISO 9 01 Thir d

p r ty aud itor s should be ex per t on the r eq uir ements of the stand ar d , and

also q ualfied to aud it any sor t of busines They w il hav e sufic ient tr aining

and ex per ienc e to q ualfy as a r egister ed aud itor Oc c asionaly they w il be

simiar ly r egister ed in r espec t of othe stand ar d s suc h as ISO 14 01 They

ar e the top of the tr ee in aud ito ter ms ( n the p st suc h aud itor s w or king

fo c er tific ation bod ies w er e often c aled ‘as es or s’ but now ad ay s the

ter m ‘aud itor ’ is gener aly used ) Their task is to aud it the busines to se

if it me ts the r eq uir ements of a p r tic ular mana ement sy stem stand ar d

They ar e not alow ed to giv e ad vic e to the busines being aud ited on how to

over c ome pr oblems in c omplanc e w ith the sy stem Al they ar e alow ed to

d o is to sa w hethe a pr oposed solution w ould be ac c epta le o not

Aud itor of sec ond -party aud its d o not ne d the same q ualfications

They are wor k ing on behalf of their employ er , and ne d to establsh that

the sy stems oper ated b the c mpany r esult in an acc epta le serv ic e to the

c ustomer This is pr edominantly c nc erned w ith prod uc t (includ ing ser v ic )

q uality, but not ex clusiv ely A customer may wish to be as ur ed that its

sup ler are operating in an env ironmentally responsible wa, that it do s

not employ slav e labour, and so on Instanc s hav e oc cur ed in r ec nt y ear

of a c omp ny ’s reputation being sev er ely d amaged when it bec ame publc

knowled e that they w ere using prod uc ts f om dev eloping w orld c u tries

w her e chid la our w as being used in the fac tories The r eputation of a

busines is the most v aluable as et that it has and has to be safeguarded at

al c osts If a sup ler has a po r safety or env ironmental re ord, this a ain

may refle t on its c ustomer w ho may not w ish to be asso iated with such

a c omp ny Se ond-party auditor hav e rules laid down b their employ er ,

but they w il usualy be permit ed to disc us any proposed solutions to

problems enc ou tered

The req uirements for an internal, or fir t-p rty, auditor are diferent and

ar e for y ou, the employ er, to dec ide You ar e employ ing an auditor (either

as an employ ee or as a c ntractor ) to car y out the w ork to be c ompleted

Diferent busines es ma cho se to do this in diferent way s Some

management sy stems ar e b sed on ‘self-as es ment’ r ather than ex ternal

asses ment, but her e it is espe ially important to be a le to demonstrate

independ enc of the fu ction being audited

Objectiv s of the audit

ISO 19 1 :20 2 lsts a n mber of pos ible obje tiv es of an audit programme,

w hich c an be b sed on c nsideration of the folow ing:

– management priorities;

– c ommerc ial intentions;

– management sy stem r eq uirements;

– statutory, regulatory and c ntractual req uir ements;

– ne d fo sup ler ev aluation;

– c ustome req uirements;

– ne ds of other interested par ties;

– risks to the organization

The guidelnes go on to giv e four ex amples of audit progr amme obje tiv es:

a) to me t the req uirements for c ertific ation to a mana ement sy stem

stand ard;

b) to v er ify c mplanc w ith c ontrac tual req uirements;

c) to obtain and maintain c nfidenc in the ca abi ty of a sup ler;

d) to c ontribute to the impr ov ement of the management sy stem

In our present c ontex t it is the last of these (item d) with w hich w e are

principally c onc r ned Incidentally, the results of the audit progr amme may

w el ser v e to me t demands u der the other hea ings, but in this bo k we

ar e most interested with improv ement and the c ntribution that auditing

can mak e to its ac hiev ement

T o do nothing is not a n option if y ou are to me t the requirements of

a ny management standa rd Every one of these includes a requirement

tha t the sy stem is regula rly a udited The IMS f a mework (se Ap endix 1)

spe ifies tha t:

a ) The orga niza tion should esta blsh a nd ma inta in a n a udit

programme for periodic management sy stem aud its to be car ied out

in ord er to d etermine w hethe or not the mana ement sy stem:

b) c onforms to planned ar angements for the mana ement sy stem

c) has be n properly implemented and maintained, and is being

adhered to

(4.3)

Ev ery management sy stem stand ard has a simiar req uirement Clearly

it is no go d going to a lot of trouble to instal a mana ement sy stem if

y ou are not going to use it, and the only wa to make sure that it is being

used is to che k Parts of it w il ne d to be che ked feq uently if they are

p rticularly c ritical, other les feq uently, but the w hole sy stem w il ne d

to be c v ered at least onc e a y ear At the time of the management r ev iew

the q uestion w il ne d to be ex amined w hether the sy stems y ou hav e put

in plac are me ting the ne ds of the busines Clearly y ou w il not be a le

to form a jud ement on this if y ou can ot be sure that the sy stem is being

folow ed You can ot c laim to be w orking in ac or danc with a sy stem

u les ther e is an aud iting pr oc d ure in plac e to demonstrate that it is

being folow ed This is the reason why ev ery mana ement sy stem standar d

imposes the obl gation to implement an auditing programme

In the present c ntext the aims of auditing are r ather wider than this We

w ant to be lo k ing not only at whether the sy stem is being folow ed, but

w hat c an be d one to make it work bet er How far do s the sy stem me t the

ne ds of a partic ular pro es ? Do s it inv olv e any d ificulties in operation

w hich c uld be ov erc me if the sy stem was c hanged? What w ould enable

pe ple to w ork bet er o more easi y or mor e cheaply ? Is ev ery thing really

nec es ary, or can the sy stem be simplfied and sti do w hat it is intended to

do? Do s the sy stem tr uly me t the ne ds of the busines ? And so on: this

is w here improv ement les

The start point should be to che k whether the sy stem is being str ic tly

folow ed, and if not, why not There are many pos ible reasons Is it that

the pe ple c nc erned do not u der tand the sy stem and w hat is wanted? Is

it ina eq uate training of the pe ple w ho are ex pe ted to folow the sy stem?

Or is it that there is something in the sy stem that makes it dific ult, o ev en

ir elev ant, in that p rticular c ontex t? Al these may be pointer to the path

of c ntin al improv ement

What is to be audited?

So w hat is to be aud ited? In the past, sy stems auditing has usually be n in

the c ntext of a sy stem designed to me t the r eq uirements of one partic ular

management sy stem stand rd The most c mmon of these w as (and sti is)

a q ualty sy stem; fo many this w as the fir t formal management sy stem

to be installed in the or ganization If a busines operated in c omplanc e

w ith ISO 9 01 (or its ante edents) the job of the inter nal auditor was to

se that the req uirements of the stand rd w ere being folow ed throughout

the org nization This w as not done direc tly b c mparison with the

stand ard, but w ith referenc e to the q ualty man al whic h the busines had

c mpied This described the q ualty sy stem in use in the busines , largely

b referenc to spe ific pro edures w hich had to be folowed in the v arious

ac tiv ities of the c mpany, principally those w hich related to the production

of the end product Initialy the auditor would hav e to che k that the

q uality manual did inde d c v er al those aspe ts w hich w ere demanded

b the standard Onc e this was establshed, auditing c ould then be car ied

out solely b refer enc to the q uality manual to make sure that w hat the

manual said was being done was in fact ha pening In just the same wa,

a safety man al w ould be c mpied to d escr ibe how the busines w ould

me t the r eq uirements of, sa , OHSAS 18 01, and activ ities throughout the

busines che ked a ainst that manual

In this bo k we are c nsidering the problem of auditing an integrated

management sy stem The busines has rec ognized that q uality, env ironment,

health and safety, and so on are all part of the busines of ru ning the

organization and p rt of an ov erall sy stem If the c omp ny w ishes to be

c rtific ated as c mply ing w ith ISO 9 01 or ISO 14 01 it wi sti hav e

to me t the spe ific req uir ements for q uality o for env ironment, but

these w il just be aspe ts of the ov er all integr ated sy stem, whic h may w el

includ e fu ctions whic h are not the subje t of any spe ific mana ement

sy stem stand ard – such as sales and marketing, or distribution The ov eral

integrated mana ement sy stem fr amew ork (reproduc d as Ap endix 1) can

c v er all the activ ities of a busines Some or ganizations wi use it merely to

integrate the req uirements of the thre most c ommon management sy stem

stand ards, those c v ering q uality, oc cupational health and safety and the

env ironment Other wi hav e pr ogres ed further and hav e inc orporated

many if not all the sy stems in use throughout the busines , c v er ing

ac tiv ities such as sales, per on el, ac cou ts, distribution, information

sec ur ity or customer satisac tion The IMS famework is designed so that

it can inc rpor ate as many or as few of the sy stems the busines uses as is

w ished The av era e busines wi hav e many diferent sy stems oper ating

Most of them w il hav e be n dev ised for use w ithin a single d epar tment

or fu ction The ac cou ts dep rtment wi almost c ertainly hav e its ow n

sy stem, and so w il the per son el dep rtment, and so w il sales, although

initially they w il probably not hav e be n rec orded formaly, or perha s

not ev en writ en d own They w il, howev er, all hav e a n mber of features

in c ommon, and all c an be brought within the IMS f amework and the

integrated sy stem if wished, to the great benefit of the busines The more

that ev ery one r ec gnizes the u ity of purpose behind al these sy stems the

more the busines wi progr es

This bo k describes how to aud it such an integr ated sy stem; but the

principles of auditing are the same whether dealing w ith a single simple

sy stem such as might be in use w ithin a per on el o despatc h dep rtment,

or whether the busines has a fuly integrated sy stem inc rpor ating them

al Ev en if the busines has only a single formal mana ement sy stem, such

as q ualty, the principles and practic e are just the same and the sug estions

are sti applca le

Procedures and proces es

Tr aditionally sy stems w er e described in a manual – perha s a q ualty

manual o a safety manual – at the high lev el, and put into prac tical efec t

b sets of proc edures whic h desc ribed how each task w as to be per ormed,

u les this w as obv ious f om the training that the operativ e ha rec eiv ed

If, for ex mple, a busines operated a fle t of delv ery lorr ies, it w as not

nec es ary to hav e a pr oc d ure tel ng the driv er how to driv e the v ehicle

The fact that the dr iv er had an HGV lc nc e w as sufic ient ev idenc e of

tr aining There would ne d to be proc edures, how ev er, d escr ibing how the

dr iv er w ould know w hat v ehicle to tak e, w here to get fuel, what to do in

an acc ident or breakdow n, and so on For ev er y ac tiv ity there had to be a

proc edure or ev idenc of tr aining in that task

The emphasis is now les on pro edures and is much mor e on pro es es

These desc ribe w hat is to be done and in what seq uenc to a d the v alue

w hich is the pur pose of the oper ation In the past auditing has often

inv olv ed lt le more than c hec king for c omplanc with a par ticular

proc edure; auditing based on pro es es should c hec k that eac h pro es is

delv er ing w hat it is intended to d elv er Whist the cur ent v er ion of the

q uality stand rd, ISO 9 01:20 0 sti req uires w rit en proc edures for a few

activ ities, the fu d amental req uirement is that all pro es es (imp cting on

q uality ) should be identified and c ontroled Sec tion 4.1 of ISO 9 01:20 0

stipulates:

The organization shal

a) identify the pr oc s es ne ded for the q uality mana ement sy stem

and their applcation throughout the org nization;

b) deter mine the seq uenc e and interac tion of these proc es es;

c ) determine cr iteria and methods ne ded to ensure that both the

operation and c ntrol of these pro es es ar e efe tiv e

I go s without say ing that these pro es es should be re orded as otherwise

they cannot be c ntroled

I w il be re ognized that this r eq uirement is v irtually identical to the

fir t se tion, se tion 0, of the IMS famew ork Ap roaching a busines

sy stem thr ough its pr oc s es instead of through its pro edures has many

ad v antages, perha s the chief being that it ena les the risks to be as es ed

in respe t of eac h of the disc iplnes c ov ered b the integrated sy stem

In practic al terms the most satisactor y wa of id entify ing the pr oc s es

and their interaction is b proc es mapping The methods of doing this are

described in other bo k s in this series and w il not be repeated here, but a

brief note on the principles is inc luded in Ap endix 2

J ust as a q uality man al is demanded b the q uality stand rd, so it is

nec es ar y to hav e a sy stem manual for the integrated sy stem The IMS

fr amew ork say s:

The or ganization should establsh and maintain a man al that

includes

a) the sc ope of the mana ement sy stem …;

b) the doc umented pro edur es esta lshed for the management

sy stem …; and

c ) a description of the interaction betw een the pr oc s es of the

mana ement sy stem

(3.4.2)

The manual itself w il pr ob bly be a smal d oc ument d esc r ibing the sy stem

at a high level As a minimum it w il c ontain a statement of the busines

objec tives (pr ob bly ) and polc y (es ential ; r oles and r esponsibi ties;

pr oc es id entific ation and ma ping; and r isk mana ement and c ontr ol

These ar e the es entials, eac h of w hic h is lkely to be ex pand ed in a pend ic es

and an ex es

Whist an auditor wi c rtainly ne d to be fami ar with the manual, the

heart of the sy stem w il be in the pro es maps and the information that

they c ntain

In an ear lier bo k in this series IMS: Cr eat in a Ma u l a simple

ex mple was giv en of an operation w hich takes plac in almost any kind

of busines – re eiv ing an ord er fom a customer or c lient and entering it

into the c omp ny ’s sales sy stem In other kinds of or ganization it ma be

the admis ion of a patient into a hospital, a pupi to a sc ho l, an enq uiry or

a r eport to a polc station, but the pr oc s es are simiar in each c ase The

proc es dia ram is reproduc d in Figure 3.1

When auditor c ome to audit this par t of the busines , the fir t thing they

w il do is to lo k at the proc es ma and u der tand how the pr oc s fits into

the busines as a w hole That is obv ious in this ex ample, but may be more

c omplcated in other proc es es The nex t thing is to talk to the pe ple doing

the job to u der tand w hat they do, how they c hec k their w ork, w hat they

do if they me t a pr oblem, and so on so that the pr oc s map can be v erified

as being fac tually c or e t and c omplete – that it really do s represent w hat

ha pens, not w hat the mana ement would lke to happen, and that it is

c omplete Often ad ditional sub-pro es es get a ded ‘u oficially ’ and these

ne d to be ex amined I may be that the pro es as originally d escr ibed

prov ed to be dificult to w ork with,or inadeq uate for one reason or another

and in prac tic the employ ee is doing things difer ently The r easons ne d

to be u der to d Is it be ause of lazines on the part of the employ ee (rare)

or inadeq uate training, or is ther e some gen ine weaknes in the pro es

as desc ribed and some sy stem improv ement is c alled for This is the whole

purpose of the ex ercise – to impr ov e the sy stem In the c ntex t of this bo k

that is w hat aud iting is al a out

As part of d escr ibing the pro es es any spec ific req uirements of partic ular

standard s w hich the busines has adopted wi hav e be n noted and buit

into the sy stem For ex ample, ISO 9 01:20 0 has q uite a lot to sa a out

taking order f om customer As a principle it lay s dow n, u der the

heading of ‘Customer foc us’ the req uirement that: ‘Top management shall

ensure that customer req uirements ar e deter mined and are met with the

aim of enhancing c ustomer satis action’ (5.2)

More spe ific ally the stand rd go s on to say :

The or ganization shal d etermine:

a) req uirements spec ified b the customer, includ ing the req uirements

for delv er y and post-d elv ery ac tiv ities;

b) req uir ements not stated b the c ustome but ne es ary fo

spe ified or intended use, w her e known;

c ) statutor y and r egulator y r eq uir ements r elated to the pr od uc t; and

d ) any additional req uir ements determined b the organization

(7.2.1)

Fig r e 3.1 A simple example o pr oc s ma ping

Proc s s Re fe re n ce 1.A.1

Or de r R ece i pt an d Han dl i n g

I nput, r al izati on and outp t

Res ourc es ne ded

Faci tie a d Equipment

Req ired output

Or de r e n t ere d on compu t e r syst e m

In other w ords, it is es ential to u der stand what c ustomer really

w ant, not just w hat they hav e asked for Before acc epting the orde the

organization should:

… ensur e that:

– product req uir ements ar e defined;

– c ntract o order req uirements difering fom those prev iously

ex pres ed ar e resolv ed ; and

– t h e organ i zat i on has t he a i l i t y to m eet th e d efi n ed req u i r em en t s

(7.2.2)

The stand rd also say s that re ords hav e to be maintained to show that this

rev iew has be n d one, and furthermor e that:

W here the customer provides no do umented sta tement of

req uirement, the customer req uirements shal be c nfir med b the

org nization before ac ceptanc

(7.2.2)

Clearly the stand ard has to c v er al situations, f om buy ing a bar of

c ho olate in a sw eetshop to plac ing an or der for a major c nstruction

c ontrac t In ev er y day shop ing tr ansac tions, or order ing a stand rd item

f om a c atalogue, the applcation of these r eq uirements can be in the

simplest form, but if the standar d is to be satisied it should be pos ible

to show that they hav e al be n folowed Lo k ing again at the simple flow

c hart for the pro es they all c ome in the sec ond box ‘Detais che ked b

ac ou t handler ’ – is it clear w hat the customer wants, can w e sup ly it,

c an w e prov ide it when it is wanted etc ? Only w hen all these are satis ied

c an the ord er be pronou c d ‘OK’ A wr it en pro edure may spel this out

and also stipulate that entering the ord er onto the c mputer sy stem forms

the rec ord that the stand rd req uires to show that these things hav e be n

done The audito wi ne d to c hec k that this is happening as it should

– that the ac cou t handler has ha the training ne d ed, knows w hat to do

if d ificulties arise, and so on

In the proc es of or der entry, the implcations for the env ironment or

health and safety ar e lkely to be les signific ant than fo q uality but w il

hav e to be c nsidered and audited R isks w il, or should, hav e be n asses ed

in r espec t of all these field s With other pro es es the implcations for

env ironment, health and safety and so on wi be muc h greater, and there

may also be implcations fo infor mation sec urity, fo ex ample Points to

lo k for in r espec t of par ticular management sy stem stand ards are noted

later in this bo k, but auditor w il ne d to hav e these req uirements

c ntin ally in mind to make sure that none has be n mis ed They wi go

thr ough these r isks w ith the per on el c nc erned , not in any wa to ‘sec ond

gues ’ them but just to c hec k that they are sti v alid and cur ent, that

the nec es ar y ac tions hav e be n taken, and that the r esponsible manager

is regularly che king that no new risk s hav e emerged sinc they were

for mulated Fo ex ample, if a new arr angement means that an operator

now has to w ork at a c omputer terminal, the Display Scr een Regulations

w il hav e to be taken into acc ou t

That i n out li n e is w hat we wou ld expect th e system au d i to to d o when

au d i ti n g thi s p r ti c u l ar pr oc es The fu ncti on wil l be consi d er ed i n m or e

d etai l l ater, but the exam pl e l ead s on t o a con sid er ati on of fur t he q uesti on s

whi c h have to be an sw er ed when pl ann i n g an aud it of the c om pl ete system :

– Who should do the audit?

– What sort of per on is ne es ary ?

– Can we find one, o them, fom within our own organization?

– What training w il they ne d?

– How do w e pr ov ide that?

– How are w e going to org nize the audit?

– Is it to be b department, or function, or pro es , or how?

– How long is it going to take?

– How dis uptiv e is it going to be?

– What is it all going to c ost?

– What are the benefits

– Is it worth it?

Al these are c nsidered nex t u der the heading of org nizing the audit

Hav ing dec id ed on w hat w e w ant the audit to achiev e, the nex t is ue is how

to c arr y it out This starts w ith the q uestion of w ho is to do it

Finding the a uditors

A large organization may hav e a ful time spec ialst sy stem auditor, or ev en

a sy stem audit dep rtment, w hose sole job w il be to spend time w ith each

p rt of the busines se ing how the sy stem is w orking A smaler busines

w il not ne d, or ev en be able to afor d, this and w il pr obably rely on its

existing staff to d o some auditing along with their regular jobs Although

this w il inv olv e a lot of ex tra w ork to start w ith, it has many ad v antages

ov er other methods, as wi be se n

You can, of c ur e, employ an outside auditor If y our is a small busines

c ertific ated to, say, ISO 9 01 and y our chief c nc ern is to maintain y our

c ertific ation, then employ ing a c onsultant – perha s the one who helped

y ou to ac hiev e c ertific ation in the fir t plac e, and who ther efor e already

knows y our busines – may be the sensible thing to do If on the other hand

y ou are lo king to achiev e mor e f om y our audit progr amme than just a

tic k and a c r tificate, it is bet er to employ y our ow n staff No outsid er,

no matter how bri iant, can ev er k now y our busines as w el as y ou do,

and w il in general not be as go d at spot ing sc pe for improv ements in

the general busines pro es Your own staff, to , wi benefit f om the

ex erienc of auditing their c oleagues’ w ork They ma hav e sy mp thy fo

their problems and d ev elop a new u d er tanding of w hat they d o In shor t

it can w ork wonder for the team spirit of the busines But this d epends

on picking the right sort of pe ple to do the auditing

The Br i tish Stand ar d BS EN ISO 19 1 :20 2 ‘G u id el i nes fo q ual ity and /

or envir on men tal man agem en t systems au d iti ng’ l ists a nu mbe of pr i n c ipl es

r el ati ng to aud i tor s:

– ethical c nduct – tr ust, integr ity, c nfidentiality and disc retion;

– fa ir presenta tion – the oblga tion to report truthfuly a nd

acc urately ;

– d ue pr ofes i on al c are – th e a pl i c at ion of d i l igen c e an d ju d gem en t;

– independenc e – imp rtial and obje tiv e;

– ev idenc -based approach

(4)

These per onal req uirements are ex panded later in the standard :

An auditor should be:

– ethical, ie fair, truthful, sinc re, honest and discre t;

– open-minded, ie w il ng to c nsider alternativ e id eas o points

of v iew;

– d iplomatic , ie tactful in dealng with pe ple;

– observa nt, ie a ctively a wa re of physica l sur ou dings a nd

activ ities;

– perc ptiv e, ie instinctiv ely aw are of and a le to u der stand

situations;

– v er satie, ie adjusts readiy to difer ent situations;

– tenac ious, ie per istent, foc used on ac hiev ing obje tiv es;

– d ecisiv e, ie reaches timely c nclusions based on logical reasoning

and analy sis; and

– self-relant, ie acts and fu ctions independently w hie interacting

efe tiv ely w ith other

(7.2)

If this se ms r athe d emand ing fo our pur pose, bear in mind that the

stand ar d is w r it en to be of gener al a plc ation in aud iting inc lud ing sec ond -

o thir d -p r ty aud its Fo inter nal aud its it is sti impor tant that aud itor s

are not notic ea ly lac king in any of these q ualties They should not be

se n as polc e, sti les as mana ement ‘nar ks’ but mor e as mentor s o

c oac hes ensur ing that non-c omplanc es o pr oblems ar e not oc c asions fo

c ond emnation but r athe ar e op or tu ities fo impr ovement Whist an

exter nal thir d -p r ty aud ito is not alow ed to give ad vic e on the solutions

of pr oblems, ther e is no suc h c onstr aint on inter nal aud itor s w ho should

tr y to be as helpful as pos ible, although should not be r eg r d ed as an

author ity on the impr ov ement of the sy stem ( n the ter minolog of for mal

mana ement sy stem stand ar d s any d ep r tur e fr om a stand ar d is d esc r ibed

as a ‘non-c omplanc e’ o ‘nonc onfor mity ’ In this bo k w e use the shor te

w or d ‘pr oblem’ to d esc r ibe suc h a situation – it avoid s any sug estion of

guit, is shor ter, and sug ests that it is something to be solved b a c ombined

efor t r athe than c or r ec ting something that some ne else is d oing w r ong

So w hen c onsid er ing w hic h member s of y our staf might take p r t in an

aud it pr ogr amme as aud itor s ( hey w il al be aud ite s at some sta e), av oid

any one w ho y ou might thin c ould use the situation to make d ific ulties fo

a c olea ue w ith w hom they d o not alw ay s se ey e to ey e

At w hat lev el of management should our sele ted auditor s be? An auditor

ne ds to hav e an easy relationship w ith the pe ple being audited, and these

audite s w il be at all lev els That means that auditor should not be se n

as to ju ior, but neither should they be so senior that the audite s wi fe l

intimid ted The chief ex ecutiv e would not be a go d c hoic , for ex ample

This problem do s not arise with external auditor – they are stranger

w ho w il only be ar ou d w hie the audit is going on The relationship with

an internal auditor is ongoing, although it wi be in a d iferent c ntext

The lev el of dep rtmental manager is probably the best one to aim at

for most purposes, although other in staff positions, such as per on el

ofic r , might wel be c onsidered Pr imar ily, it is the per on r ather than

their position that is important

If the busines has an establshed sy stem, such as q ualty, and is alrea y

c ertific ated to ISO 9 01:20 0, there w il already hav e be n internal aud its

c arried out b staff member s (using inter nal staf member is usually the

c ase, although ex ternal c ontrac tor c ould be employ ed) w ho hav e be n

tr ained for the purpose The q uestion arises w hether these per on el can

be used as aud itor on the integrated sy stem The answ er is c learly that

they should be – they w il alr ead y hav e be n trained in the pr inc iples of

auditing, although the a plc ation has be n only in relation to q uality.They

w il, how ev er, ne d training in r espec t of auditing the integrated sy stem,

w hich is a lot broa e than just the q ualty sy stem that they hav e be n

used to They wi therefore ne d the same tr aining as any one w ho has not

prev iously car ried out any auditing, although they w il hav e a head start

They wi also hav e to be clear that there c an be no restriction of sc pe on

the integr ated sy stem as there almost c rtainly would hav e be n on the

q uality sy stem If the ex perienc e of the q uality auditor s was lmited to

earler v er sions of ISO 9 01 then their ex perienc e w ould be les relev ant

Onc sele ted, the potential auditor wi ne d to hav e ex plained to them

w hat they are being asked to do, and giv en some training to ena le them

to do it efe tiv ely

These are two q uite difer ent areas If the mana ement sy stem has be n

embed ded into the wa that the busines wor k s, the ne d fo auditing w il

hav e be ome app rent to any one in any managerial position When the

potential audito is fir t approached about u der taking some auditing,

the usual reaction is that they are already busy enough w ith their regular

job and can ot pos ibly u der take any further d uties They w il ne d to

be per sua ed b their immed iate manager, o the chief ex ecutiv e, it being

made clear that p rticip tion is ex pec ted of them If they are sti reluc tant

they can then be asked w hich p rt of their present responsibi ties they

w ould lke to be rel ev ed of, and the amou t of time they would ne d to

spend on auditing; the f eq uent reac tion is that perha s they c ould manage

to do it after al An alter nativ e is to sug est that if they c uld not manage

to do it themselv es, c uld they sug est one of their subord inates who c ould

u d ertake the w ork Howev er, a mana e w il usualy be r eluc tant to se

something that the c hief ex ecutiv e clearly r eg rds as important being

deleg ted to a subordinate

When asking mana er s to prepare to do some aud iting in a dition to their

ex isting d uties, it should be ex plained that the ac tiv ity is one that they w il

find v alua le in doing their regular jobs The op ortu ity to u der tand

more c ompletely the activ ities – and dific ulties – of a department on whose

output one’s ow n se tion depends is often of practical use in arriv ing at an

impr ov ed method of w orking, sometimes resulting in impr ov ed method s for

both departments U nd er tanding other pe ple’s problems is often a go d

w ay of u der standing one’s ow n and can be a v aluable c ontribution to the

ultimate objec tiv e of c ontin al impr ov ement

Ho w many a uditors?

How many aud itor s w il be ne d ed ? This w il d epend on var ious fac tor s,

and the tr ue answ er w il be d isc ov er ed only b ex per ienc e As a star ting

point, as ume that eac h d ep r tmental mana e w il aud it the d ep r tment

immed iately ‘upstr eam’ fr om their ow n; that is to sa, if Dep r tment B

r ec eives the output fr om Dep r tment A, then the mana e of Dep r tment B

w il aud it Dep r tment A If the pr oc es ma show s that the or d er d ep r tment

p s es or d er s to the pr od uc tion plan ing d ep r tment, then the mana e of

the lat e c ould aud it the for mer, and so on thr oughout the or ganization In

pr ac tic e this is u lkely to pr ovid e a satis ac tor y answ er ac r os the busines ,

but it w il pr ovid e a guid e to the n mber s r eq uir ed

The time taken to aud it a spec ific d ep r tment w il d epend on the size of

the d ep r tment, but mor e signific antly on the n mbe of d ifer ent ac tiv ities

that take plac e ther e A d ep r tment of 50 pe ple al d oing the same thing w il

ne d les aud iting than a d ep r tment of 10 pe ple al c ar r y ing out d ifer ent

and c omplex tasks As a r ule of th mb and to get things star ted , as ume that

eac h d ep r tment w il ne d one d ay a y ear fo aud iting Ex per ienc e w il so n

show that this is not c or r ec t – some d ep r tments c an be aud ited in half a d ay

o les , w her eas other s ma take muc h longe – but as a fir st a pr ox imation

this w il pr ovid e an ind ic ation of how many aud itor s ar e r eq uir ed The

sy stem mana e o w ho v er is mana ing the aud it pr ogr amme ma use

their know led ge to as es the time ne d ed fo eac h d ep r tmental aud it As

the aud itor s themselv es bec ome mor e ex per ienc ed they ma find that a pr

e-aud it visit to the d ep r tment is w or thw hie to as es the w or k inv olved This

is c ommon pr ac tic e amongst ex ter nal aud itor s w her e the lea aud ito w il

use it to as es the ma nitud e of the job

Training the a uditors

Who v er is sele ted to c arr y out the audits w il ne d a eq uate training

This do s not c omp re with the training that a third -party auditor

ne ds in ord er to be ome c mpetent in as es ing an organization prior

to c r tification, but there are sti basic skils that should be acq uired

There are the skils of auditing in gener al ir respe tiv e of the sy stem being

audited There is also the ne d to be thoroughly fami ar w ith the sy stem

being audited I is not nec es ary fo an inter nal auditor to ac q uire the

same depth of k now led e ne ded b an ex ternal auditor w orking fo a

c ertific ation bod who has to determine w hethe a busines q ualifies for

c ertific ation to, for ex ample, ISO 9 01 or ISO 14 01 Fo internal auditing

the pr inc ip l ne ds are to u der tand the integrated management sy stem

of the busines , to u der stand the pr oc s es inv olv ed and how they relate

to eac h other This is les demanding and les time c nsuming

Some outsid e help ma w el be ne d ed to tr ain in the pr inc iples of

aud iting (u les y ou have a tr aining d ep r tment w hic h ha pens to have

the nec es ar y skils) One d ay ma be sufic ient but tw o d ay s is pr efer r ed

as this w il ena le some pr ac tic al ex er c ises to be u d er taken If mor e than

tw o o thr ee pe ple ar e going to be involv ed it w il pr ob bly be bet e to

ar r ange a c our se to be r un inter naly so that it c an be r elevant and spec ific

to the c ir c umstanc es of y our busines The tr aining in the oper ation of y our

integr ated mana ement sy stem c an pr ob bly be c ar r ied out b y our sy stem

mana e o w ho ver is r esponsible fo the oper ation of y our over al sy stem,

per ha s w ith as istanc e fr om y our tr aining mana e if y ou hav e one Ag in,

one d ay should be sufic ient fo a smal o med ium sized busines u les it

is p r tic ular ly c omplex In the c ase of a lar ge busines it is nor maly pos ible

to d iv id e the w or k into a n mbe of spec ific ar eas that c an be c onsid er ed

sep r ately Ther e is no ne d fo al aud itor s to be ex per t on the sy stems

oper ating in ever y p r t of the busines , although a gener al know led ge of the

over al pr oc es ma of the busines is c er tainly d esir able

Let us ima ine that y ou hav e selec ted the manager who ar e going to be

y our audit team, and hav e ex plained in outlne w hat the w ork inv olv es

You hav e gathered them all together for a training c our se Although they

may wel be ex perienc ed and fuly c mpetent mana er s, auditing a sy stem

w il be something q uite new to them They w il hav e lt le idea of w hat is

w anted o how to set a out it and they may wel sti harbour doubts about

its usefulnes

I w ould be useful to start b remind ing them of the purpose of

management sy stems in general, those spe ific stand ards whic h the

busines folows (eg ISO 9 01, ISO 14 01) together w ith any other s whic h

ar e inc r porated into the integr ated management sy stem of the busines

A reminder of the princ iple of an integrated sy stem would also be useful

They w il hav e be n told this before, and ma w el hav e be n inv olv ed in

its implementation but a ref esher w il not go amis

The ne d for a sy stems audit w il then be ex lained Start w ith ex amples

of what the audit pr oc s c nsists of – doing some homewor k on the

oper ations of the d epar tment whic h is going to be audited, ex amining its

proc es ma s, the dimensions of the sy stem (env ironment, health and

safety, etc) the r isks that hav e be n identified, etc Of all the r easons for

car y ing out an audit, the fir t one that pe ple usually re ognize is that

it is demanded b all management sy stem stand ards This is true, but is

the least important In the p st a lot of auditing was merely c hec k ing for

c mplanc to a stand ard, but that should no longer be the case An audit

of a proc es -b sed sy stem should che k that eac h proc es d elv er w hat it

is sup osed to – that the pro es is per orming as w as intended This w ay

auditing a ds v alue to the busines in its own right The audit results w il

fe d into the periodic mana ement rev iew The rev iew w il ex amine how

w el the sy stem is serv ing the ne ds of the busines , and it is not pos ible to

for m a jud ement on this u les one can be sure that the sy stem is ac tually

being folow ed In our present c ntex t the most important reason of all for

car y ing out an aud it is to find w ay s in whic h the sy stem c an be impr ov ed,

and to asc rtain that improv ement is in fact happening

The traine auditor s wi then be taken through the v arious sta es of an

audit The fir st sta e is the w rit en author ization f om the chief ex ec utiv e

ena l ng the auditor to ask q uestions in some ne else’s department The

c hief ex ecutiv e initiates and authorizes the aud it taking plac e Then c mes

the initial discus ion w ith the dep rtment manager, auditing through the

department, re ording the results, the closing discus ion w ith the manager,

and so on Al these stages w il be c onsid ered in more detail later in this

bo k, but al w il ne d to be c v ered in this initial tr aining

As the pro es w il almost c r tainly be new and ev en foreign to the

manager who ar e going to bec ome auditor , there w il pr obably be q uite

a lot of u c r tainty at the end of the training period The greatest help

is ex erienc , and that c annot be acq uired immed iately Confidenc e w il

ra idly rise afte they c omplete their fir t audit

The prog ra mme of work

Ther e w il be a pr ogr amme of w or k to ensur e that the w hole busines is

c ov er ed in, per ha s, the c our se of a y ear, but also that the ar eas r eq uir ing

p r tic ular at ention ar e visited mor e fr eq uently This ma be bec ause

they ar e high r isk ar eas, w her e a d ep r tur e fr om the sy stem c ould hav e

ser ious c onseq uenc es fo the busines – often the c ase in fo d pr oc es ing

o phar mac eutic als, fo ex ample Or it ma be that the d ep r tment has

ex per ienc ed d ific ulties in the p st in ad her ing to the sy stem and ne d s

help in av oid ing nonc onfor mities Or it ma be that ther e hav e be n staf

c hanges w her e ad d itional tr aining w as r eq uir ed The pr ogr amme should

be gear ed to r isks and ne d s, r athe than a mec hanic al timeta le, w ith

c ar e being taken that no d ep r tment is mis ed out entir ely I is impor tant

that the pr ogr amme is ad her ed to Ther e w il alw ay s be ar eas w her e some

postponement is r eq uested bec ause of ur gent ne d s that hav e ar isen These

should be r esisted ex c ept in ex tr eme c ases; any var iation in the pr ogr amme

should be author ized b the aud it mana e – sy stem mana e in the c ase w e

ar e c onsid er ing – and if they d o not a r ee, the c ase should be r efer r ed b c k

to the c hief ex ec utive fo a d ec ision

The IMS f amework summar izes the req uirement:

The aud it pr ogramme, inc luding any sc hedule, should be based

on the r esults of risk asses ment of the or ganization’s activ ities

and the results of prev ious audits The audit ar angements should

c v er the sc pe, f eq uenc y, methodologies and c ompetencies, as w el

as the responsibi ties and req uirements for c nducting aud its and

reporting results

(4.3)

Only ex per ienc w il ena le a meaningful programme to be buit up The

fir t time that a sy stem is aud ited the progr amme w il hav e to be based on

c mmon sense with the ov err id ing ne d to c v er the w hole sy stem ov er a

set period of time, ensuring that the areas of greatest risk are c v ered early

in the programme This initial aud it w il almost c ertainly point to p rticular

ar eas whic h are mor e pr one to dific ulty and whic h may be identified as

req uiring spec ial at ention on subseq uent audits The importanc of ful

re ording of all audits, together w ith notes for refer enc on futur e audits,

is obv ious The matter of r ec r ding w il be c onsid ered in more detail later

in this bo k

In the past, auditing has often be n reg rded as a mec hanical proc es

Aud itor hav e be n pr ov ided with she ts of q uestions and tic k box es, going

thr ough the proc edures is ued to implement a stand rd and c hec k ing that

each w as being folowed – has this item be n signed of? Are the inspe tion

re ords c mplete? Has this instr ument be n calbr ated? Is the training

re ord c omplete? And so on That is auditing at a v ery super ficial lev el, and

w il be totaly inadeq uate to me t the purpose that w e ar e now c nsidering

Quality, for ex ample, in ISO 9 01:20 0 r eq uires a lot more than blndly

folow ing a set of rules (pro edures) that might hav e satis ied the earler

v er ions of the standar d The auditor ne d s to establsh not only that

the sy stem is being folowed, but that it is u der to d If pe ple do not

u d er tand what they ar e being asked to d o, and w hy they ar e doing it, any

sy stem w il so n fal into disuse

If y our busines is large enough to justify employ ing a spec ialist

department of profes ional sy stem auditor s, then planning and c arry ing

out the ne es ary aud its w il pr esent few problems Most busines es are not

in that categor y Either the auditing has to be done b one’s own staf o

help should be hired ex ter naly – a les satis ac tory route, but u av oid able

at times

I is one of the req uirements of any sy stem that the auditing is ‘…

c nducted b per on el independent of those hav ing dire t responsibi ty

fo the activ ity being ex amined’ ( MS famew ork 4.3) This is c mmon

sense I do s not imply that mana er s cannot be trusted to giv e truthful

answ er , but rather ensures that ther e ar e no misu der tandings about

w hat is req uired I is not u c mmon for an auditor to find that an employ ee

is mis ing out part of the sy stem be ause they did not u d er tand w hat w as

req uired o did not realize the importanc of a p rticular aspe t Taking

short cuts may be ac eptable, and ev en laud ble in some instanc es – they

often lea to bet er way s of doing things – but w hat ma a pear an in o ent

omis ion on the part of one per on may lead to sev ere dific ulties elsewhere

At the other ex treme an auditor wi oc casionaly disc v er that some ne is

doing a lot of u ne es ary w ork be ause they hav e misu der to d w hat the

sy stem is ask ing of them, and that in realty things are much simpler than

they thought For al these reasons an independent auditor is ne es ary

So how do s the one-man busines audit his/her busines ? In prac tical

terms there are v ery few busines es w here a sole proprieto w orks w ithout

any other help at all They w il usual y hav e some ne who ty pes their let er

for them, some ne who keeps their acc ou ts, and so on, and one of those

might be suitable and wi ing to audit the sy stem Clear ly they ne d to be

the right sor t of per on – that is something w hich w il be c onsid ered late

in this bo k They w il also ne d tr aining of some kind – training in the

sy stem so that they know w hat to lo k for, and also tr aining in the pr actic e

of auditing itself As w el as this bo k there are v ar ious publcations w hich

giv e guidanc and there are also training c ur es, but it is hoped that for

most purposes the guidanc e c ntained in this bo k wi prov e suficient

If the sole pr oprietor has no one in or lnked to the busines w ho is

c onsidered suitable, then the serv ic es of an outside audito or c nsultant

may be req uir ed to car y out an audit onc e a y ear or so That has the

a v antage of prov iding an ind ependent and ex pert v iew of the operation of

the sy stem, but f om other points of v iew is les satisac tory than hav ing

some ne as o iated w ith the busines c arr y out the audit

In any organization other than a one-man busines there is usualy some

w ay in w hich member of the busines c an c arr y out audits in addition to

their regular jobs There wi hav e to be more than one bec ause of the r ule

that no one should aud it an ac tiv ity fo w hich they hav e direc t r esponsibi ty

– so some ne else should audit the job that the auditor nor maly do s In

the c ase of a partner hip of tw o, then each can aud it the wor k of the other

The more pe ple that there are in the busines the easier it is to arr ange

for the auditing to be d one

Organ izin g the au d it che klist

I is important that all of the folow ing are che ked

– Do al the manager u der stand the purpose of auditing the

integrated sy stem and why it is important?

– Hav e al the auditor be n sele ted?

– Hav e al auditor s be n tr ained, or has training be n ar anged?

– Wer e responses to the training positiv e, o do they sug est that

further training wi be ne ded ?

– Has the prov isional pr ogramme of work be n c mpied? Do s it alow

for flex ibi ty with ex perienc e?

– Are the aud itor fuly c onv er ant w ith the req uirements of

spec ific standard s to whic h the busines is registered o is se king

to be registered?