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Internal Audit

Contents
Internal Audit Definition
Types of Audit
Auditors Role

Benefits of Internal Audit

Disadvantages of Internal Audit
Audit Phases

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Internal Audit Definition

Systematic, independent and documented process for
obtaining audit evidence and evaluating it objectively
to determine the extent to which audit criteria are
fulfilled

Audit Types
1st Party Audit - Us On Us - (Internal)
2nd Party Audit - Us On Them - (Supplier Audit)
3rd Party Audit - (Independent organization

perform audit on us on behalf of other parties).

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Auditors Role
To objectively audit the working practices against

standards, procedures and other planned

arrangements
To report the results to the Management Team and

all other concerned parties

To assist understanding and interpretation.

Benefits of Internal Audit

1.

Increased confidence of system effectiveness

2. Highlights weak areas and new requirements

3. Improves understanding of the system
4. Identifies means for continual improvement
5. Supports a preventive culture

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Disadvantages of Internal Audit

Causes anxiety
Uses peoples time
Disrupts daily works

Audit Phases
1.

Planning Phase

2. Field Work Phase

3. Reporting Phase
4. Follow-up Phase

Report

40%

10%

Field
Work

10%

Followup

Plan

40%

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Planning Phase
Scope
Schedule & frequency
Assign resources
Study documents
Determine sampling technique
Logistic Preparation
Notify Auditee
Prepare Checklist

Checklist
Structured guide
Aid memory
Expedite audit field work
Formatted or not?
Printed or not?
Not mandatory

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Field Work
Opening Meeting
Examination
Evaluation
Closing Meeting with Auditee

Opening Meeting
Introductions
Scope - what you will be examining
Time - how long you intend to take
Conduct - how you will conduct the audit
Disclaimer no problems found does not mean non exist
Categories of findings
Feedback - the closing meeting schedule
Guide - sometimes required for external auditor

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Examination
Interviews
Checking document & record
Observation of current activities
Make notes - record ALL observations
Explain possible nonconformities
Stick To Schedule

Auditor & Auditee Behavior

Confrontational

Remain calm and focused

Time wasting

Imply that you may have to extend the audit

Distraction

Stick to the audit

The Bended Knee

Ignore

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Auditor & Auditee Contest

Self Pity

Be understanding... Then press on

Amnesia

Make notes... Get the evidence yourself

No One Here !

Ask for deputy - or withdraw and report

Fixed Evidence

Always obtain the evidence yourself

Questioning Techniques
Open questions vs. Closed questions.
Ask for objective evidence
Phrase questions to suit Auditees understanding
Ask others the same questions - to ensure common

understanding

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Auditor - Do
1.

Be diplomatic

2. Keep control
3. Be unbiased
4. Be aware and observant
5. Listen
6. Be prepared

Auditor - Don't
Give in
Nit Pick
Accept Anything As Fact
Impatient
Pessimistic
Arrogant
Unprofessional (Code of Ethics)
Ignorant

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Auditee Do
Check and read system documents
Check your records
Inform your department/team
Be clear on the audit scope
Confirm audit scope at the opening meeting
Be brief, polite & truthful

Do not answer questions that have not been asked

Audit Result
Deficiencies obtained During field work:
1.

Major Nonconformance

2. Minor Nonconformance

3. Observations

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Major Nonconformance
Contradiction with standard and/or

Documented Quality Management

System, such as:
An applicable clause of the standard
has not been addressed
2. Failure of management system.
1.

Frequency of related Minor

nonconformance is unacceptable

Minor Nonconformance
Momentary lapse in the system
Examples.
1.

Isolated incident

2. Incorrectly filed
3. Signature omitted

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Observations
Not a nonconformance at the time
But there is a risk of the observation becoming a

nonconformity if ignored

Wash-up Meeting
The evaluation - (Pre-closing meeting)
The Auditee is not party to this stage
Auditors attendance only.
Analyze the notes
Determine nonconformance (Maj. or Min.)
Note other observations to be reported

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Closing Meeting
Thank Auditee
Disclaimer
Present the nonconformities
Present the observations
Ensure understanding of all points
Discuss corrective/preventive action
Indicate timing of the report and general format
Usual courtesies and take your leave

Reporting Phase
Identification
Purpose, Scope, Objective
Details of;

Audit Schedule

Auditor and Auditee

Organization, area, location

Reference to audited areas documents

Nonconformance - Observations - Evidence
Recommendations, Conclusions and Summary
Distribution List

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Follow-up Phase
Accessible
Corrective

action implementation & effectiveness

Determine

next audit date and scope

Inaccessible
New

follow-up date

Re-audit

Workshop
Review the document to:
1. Identify any mistakes or missing information
2. Recommend for necessary improvement
3. Prepare audit check list

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