Internal Audit Questions - Accounting - ISO 9001

D

DrM2u

#11
Re: Internal Audit Questions - ISO 9001

Hi Ron. Thanks for the quick reply. We are being audited to the ISO9001:2008 Standard. As you probably know, Accounting is subject to many internal audits for many different reasons. We selected the processes with could effect the product and/or customer. Our external audit is next week. During the management review this question came into play. There was no specific audit of this group alone. They were only involved from a supporting role. Will that be good enough for the auditor? Could he fail us based on the fact that group did not receive an internal audit on their systems alone?
:applause: First of all, I believe that you have taken the smart and logical approach to auditing by incorporating the Accounting process. As a 3rd party and internal auditor I almost always included Accounting in my audits. There is astill a great debate whether Accounting should be audited, but I say YES and here is why:

- A/P (aka Accounts Payable): as part of the business process the organization needs to know when and how to pay their suppliers. Failure to pay a supplier as agreed on terms can result in the supplier not delivering materials and components when needed or even stopping to conduct business with you. In today's economy, this holds truer than ever as more and more suppliers want to be paid on time before they deliver again. Anyone who does not believe this is a fool.

- A/R (aka Accounts Receivable): as part of the business process the organization needs to be paid on time as agreed on terms. Anyone with some business sense can attest to the importance of cash flow, specially steady cash flow. Failure to get paid on time can put the organization in situations where they are not able to pay their employees, their suppliers or keep the doors open. It also can put the organization at high risk if the customer files for bankruptcy. It has happened many times where a suppleir shut down because they had too much money tied with a bankrupt customer.
(Note: I never got into the financial details of any organization, looked strictly at the process and how it interracts with the other processes)

These are my main reasons to support my position. As one can see and deduce, a failure in A/P and/or A/R can ultimately have a negative effect on the organization;s ability to satisfy customer's requirements. Isn't this one of the main points of a QMS?!?

I believe that you will be just fine in your audit. There are no specific documentation requirements applicable to the Accounting department other than as required by laws. The record retention is also often dictated by laws. The only area that could be questioned is the performance indicators and the actual performance of the Accounting department. I have seen A/R departments that monitor the accuracy of their invoices (customer disputes = payment delays), the past-due balance by number of days for example and/or the time between shipping and invoice submittal. Also A/P departments monitored outstanding invoices by numebr of days and/or invoice accuracy vs. receiving records (and sometimes fed supplier's performance into the overall supplier monitoring parameters).

As some of the postes have indicated, Accounting is one of the fuzzy areas that many 3rd party auditors avoid. Therefore it is a good chance that the process will not get audited. What I am trying to say is not to worry too much about this. It is great if you can pass a registration audit without any findings, but it is not unusual for 3-4 findings. Once you get part 10 findings then you need to take a serious second look at your QMS. Hope this helps.
 
Elsmar Forum Sponsor
S

samsung

#12
While it can be a good point of discussion why accounting should be (or shouldn't be) part of the QMS, yet the OP's current concern is, as a whole, related to review of the documents already identified and to which they are not sure if it's going to be a problem if the documents are not audited/ reviewed prior to the CB audit.
 
S

samsung

#13
Re: Internal Audit Questions - ISO 9001

:applause: I believe that you will be just fine in your audit. There are no specific documentation requirements applicable to the Accounting department other than as required by laws. The record retention is also often dictated by laws. The only area that could be questioned is the performance indicators and the actual performance of the Accounting department. I have seen A/R departments that monitor the accuracy of their invoices (customer disputes = payment delays), the past-due balance by number of days for example and/or the time between shipping and invoice submittal. Also A/P departments monitored outstanding invoices by number of days and/or invoice accuracy vs. receiving records (and sometimes fed supplier's performance into the overall supplier monitoring parameters).
DrM2u, this is what the OP must be expecting as an aid that can support to resolve his concern. Excellent reply.

First of all, I believe that you have taken the smart and logical approach to auditing by incorporating the Accounting process. As a 3rd party and internal auditor I almost always included Accounting in my audits. There is astill a great debate whether Accounting should be audited, but I say YES and here is why:

- A/P (aka Accounts Payable): as part of the business process the organization needs to know when and how to pay their suppliers. Failure to pay a supplier as agreed on terms can result in the supplier not delivering materials and components when needed or even stopping to conduct business with you. In today's economy, this holds truer than ever as more and more suppliers want to be paid on time before they deliver again. Anyone who does not believe this is a fool.

- A/R (aka Accounts Receivable): as part of the business process the organization needs to be paid on time as agreed on terms. Anyone with some business sense can attest to the importance of cash flow, specially steady cash flow. Failure to get paid on time can put the organization in situations where they are not able to pay their employees, their suppliers or keep the doors open. It also can put the organization at high risk if the customer files for bankruptcy. It has happened many times where a suppleir shut down because they had too much money tied with a bankrupt customer.
(Note: I never got into the financial details of any organization, looked strictly at the process and how it interacts with the other processes)

These are my main reasons to support my position. As one can see and deduce, a failure in A/P and/or A/R can ultimately have a negative effect on the organization;s ability to satisfy customer's requirements. Isn't this one of the main points of a QMS?!?
And this portion of your post is what I always cherish to welcome. Accounting is one of the key QMS processes which, if not interlinked with rest of the QMS, may leave the system not achieving it's true intent, i.e., customers' /stakeholders' satisfaction and it's a process where the satisfaction of many stakeholders remain always at stake.

Thanks for your convincing thoughts. :thanx:
 
C

Craig H.

#14
Re: Internal Audit Questions - ISO 9001

Having an accounting degree I was somewhat confused at first while reading this thread.

To me, A/R and A/P are separate from accounting. The process of, well, processing invoices and payments is at an arms length from the hard core accounting that is done, as mentioned, for the G/L and Statement of Net Income, IMHO. Do we all agree, then, that A/R (Customer Service to me) and A/P (Purchasing) are fair game, but making sure that GAAP (Generally Accepted Accounting Principals) is being followed is not? After all, how many of us are qualified to do such an audit (I am not)?
 
S

samsung

#15
Re: Internal Audit Questions - ISO 9001

Having an accounting degree I was somewhat confused at first while reading this thread.

To me, A/R and A/P are separate from accounting. The process of, well, processing invoices and payments is at an arms length from the hard core accounting that is done, as mentioned, for the G/L and Statement of Net Income, IMHO. Do we all agree, then, that A/R (Customer Service to me) and A/P (Purchasing) are fair game, but making sure that GAAP (Generally Accepted Accounting Principals) is being followed is not? After all, how many of us are qualified to do such an audit (I am not)?
A QMS auditor, with whatever qualification, may not be a jack of all trades yet, based on his/her auditing skills, training, competence and experience, s/he can reasonably audit any given process.

All industrial operations are based on certain scientific principles and also on 'generally accepted manufacturing practices' which every auditor isn't aware of. Similarly, the seemingly simple processes like logistics, material management, receiving and inspection, calibration, statistical data analysis etc. etc. have nothing in common but all are carried out in accordance with certain principles & practices peculiar to those sorts of operations. All auditors, internal or external, may not be so fluent & familiar with every aspect of these processes yet they do audit them effectively.

Hence, in short, in order to effectively audit any process (not accounting alone), I don't think the auditor needs to have mastery over the subject s/he is tasked to audit.
 
C

Craig H.

#16
Re: Internal Audit Questions - ISO 9001

Hence, in short, in order to effectively audit any process (not accounting alone), I don't think the auditor needs to have mastery over the subject s/he is tasked to audit.
Agreed. But, they MUST have knowledge of the standard they are auditing to. My (now obsolete) copy of GAAP runs 3 volumes, approx. 6"x8", 1 1/2 inches thick each, printed on rice paper.

You can do an effective audit to GAAP? Sorry, respectfully, I doubt it. I could not do one now.
 
D

DrM2u

#17
Re: Internal Audit Questions - ISO 9001

Having an accounting degree I was somewhat confused at first while reading this thread.

To me, A/R and A/P are separate from accounting. The process of, well, processing invoices and payments is at an arms length from the hard core accounting that is done, as mentioned, for the G/L and Statement of Net Income, IMHO. Do we all agree, then, that A/R (Customer Service to me) and A/P (Purchasing) are fair game, but making sure that GAAP (Generally Accepted Accounting Principals) is being followed is not? After all, how many of us are qualified to do such an audit (I am not)?
:agree1: I agree! I don't think and many QMS auditors are qualified to perform financial/accounting audits to begin with. On top of that, I higly doubt that any auditor would have the time to even scratch the surface of a financial audit during a QMS audit. To add some whipped cream on the top, a financial audit is definitely outside the scope of a QMS audit. Whether one considers A/P and A/R within or outside the realm of accounting, that is another story for another debate. :lol:
 

somashekar

Staff member
Super Moderator
#18
Re: Internal Audit Questions - ISO 9001

:agree1: I agree! I don't think and many QMS auditors are qualified to perform financial/accounting audits to begin with. On top of that, I higly doubt that any auditor would have the time to even scratch the surface of a financial audit during a QMS audit. To add some whipped cream on the top, a financial audit is definitely outside the scope of a QMS audit. Whether one considers A/P and A/R within or outside the realm of accounting, that is another story for another debate. :lol:
The interaction of accounting with regard to A/R in the Customer related processes (Clause 7.2) and A/P with regard to Purchasing (Clause 7.4) so as to close the loop and the interface of accounting with regard to Resource management (Clause 6) are perhaps the only matter when we talk about accounting in this context of the OP's question. Great feedbacks so far, and coming to objectives of accounting ... how s this ?
<< To hit at 100% "on due date" payments to all vendors monitored on a monthly basis >>
 

Helmut Jilling

Auditor / Consultant
#19
Re: Internal Audit Questions - ISO 9001

DrM2u, this is what the OP must be expecting as an aid that can support to resolve his concern. Excellent reply.



And this portion of your post is what I always cherish to welcome. Accounting is one of the key QMS processes which, if not interlinked with rest of the QMS, may leave the system not achieving it's true intent, i.e., customers' /stakeholders' satisfaction and it's a process where the satisfaction of many stakeholders remain always at stake.

Thanks for your convincing thoughts. :thanx:
Very few companies I work with actually have internal auditors performing internal audits of Accounting, other than perhaps around the edges. Things like record retention, doc control, training, meeting objectives. Other than that, Accounting usually has its own auditing program, using qualified CPA firms or whatever.

I wrote a nonconformance once against Accounting in an ISO 9001 3rd party audit. They had 394 customer complaints for invoicing errors, and had not taken formal corrective action, "because Accounting was not in the scope of the QMS." But, I wrote the NC against the CAR process, for failure to effectively respond to customer issues, not against Accounting.
 
S

samsung

#20
Re: Internal Audit Questions - ISO 9001

I don't know much about the Service organizations but in many manufacturing industries, lot of auditing activities, other than QMS, are carried out round the year, partly due to statutory obligations and partly because of industries' own (non-statutory) requirements. These are Technical Audits aimed at optimization of equipment efficiency, Energy Audits, Process Audits (aimed at optimization of industrial processes), Environmental audits, Water audits, GHG audits and the likes. None of these audits can be considered as substitutes of QMS audits although most of the processes (atleast those related to production & maintenance) are well touched upon during the course of such audits.

What if a standalone accounting firm or a financial institution wishes to get certified to ISO 9001 ? Can it not do so? If it can, what documentation would they have ? How would their Quality Manual look like ? What processes would they identify and monitor given that the 'year around statutory audits' cannot be dispensed with ? Would a CB advise them not to go for QMS certification since you already have lot of other auditing activities? I'm just curious to know If everyone in an accounting/ finance deptt. is busy with auditing (or being audited) all the time, as argued manytimes, who is left to do the actual Accounting?

I don't know why the 'accounting process' is always equated with Audits alone? Afterall, the QMS is much more than Audits. Since, a statutory accounting audit has nothing to do with Customer/ stakeholder satisfaction and process effectiveness, these audits should not be considered as a potential substitute of QMS auditing.
 
Thread starter Similar threads Forum Replies Date
A Internal Audit Questions ISO 9000, ISO 9001, and ISO 9004 Quality Management Systems Standards 11
A Purchasing - Internal Audit Questions Internal Auditing 8
F API Spec Q1 9th Edition Surveillance Audit - Questions about internal audits. Oil and Gas Industry Standards and Regulations 22
M ISO 13485 Audit Questions - Internal Auditor Training and other Requirements ISO 13485:2016 - Medical Device Quality Management Systems 10
T Questions about an Internal Audit Checklist for our QMS Internal Auditing 41
E TS16949 Internal Audit "What do I Do" questions Internal Auditing 6
K Sample Questions for Auditing Management Rep , Internal Audit and Reg. Compliance Internal Auditing 7
L Written Supervisory Procedures - Internal Audit Checklist Questions Internal Auditing 2
M Internal Audit questions on Technical Resources & Work Environment Internal Auditing 9
L Top Management - Internal Audit Questions to Ask Internal Auditing 17
M Internal Audit for ISO 14001 - Questions for Management Internal Auditing 12
Q APQP Compliance Internal Audit - Ideas, check lists or main questions to prepare APQP and PPAP 9
C New to performing internal audits - Looking for audit questions Internal Auditing 5
T Internal Audit questions for Statistical Process Control and Process Control Internal Auditing 14
T Supplier Control in TS 16949 - How to spice up my Internal Audit questions IATF 16949 - Automotive Quality Systems Standard 13
S Need questions for Internal Audit of Financial departement? Internal Auditing 11
A Internal Quality Audit - Can I follow the Auditors and Ask Questions? Internal Auditing 11
Q Internal Audit Questions - Does anyone have sample questions for Management Internal Auditing 16
C Audit Differences - Process, Product, Internal? (4 questions) - TS 16949 General Auditing Discussions 7
N Simpified ISO 9001 Internal Audit Questions Internal Auditing 19
Q ISO 9001-2015 Internal audit finding Internal Auditing 12
lanley liao How to understand this words that the planning of internal audit shall take into consideration the results of previous audits? Oil and Gas Industry Standards and Regulations 10
A Add MDSAP to Internal Audit Schedule Medical Device Related Regulations 0
J IATF 16949 Internal Audit question - Auditor's responsibility Internal Auditing 6
S IATF 16949 Internal Audit Example IATF 16949 - Automotive Quality Systems Standard 7
R AS9100D internal audit checklist or ISO 9001 2015 to AS9100 D AS9100, IAQG, NADCAP and Aerospace related Standards and Requirements 2
M ISO 13485:2016 internal audit checklist Medical Device and FDA Regulations and Standards News 5
salaheddine96 Internal audit planning Internal Auditing 2
M ISO 9001 Major Nonconformance Internal Audit Schedule/COVID-19 ISO 9000, ISO 9001, and ISO 9004 Quality Management Systems Standards 18
E MDR internal audit Internal Auditing 1
U Internal Auditor not trained but done Audit for some process Nonconformance and Corrective Action 5
B Looking for 10 Internal Audit Online Training Participants ISO 17025 related Discussions 2
H AS9100 Checklist for Internal Audit needed AS9100, IAQG, NADCAP and Aerospace related Standards and Requirements 2
A What are the pros and cons of using an audit software for internal auditing? General Auditing Discussions 7
F Internal Audit before Pre-Assessment ISO 17025 related Discussions 2
Q Internal audit plan template Internal Auditing 12
L Internal audit during COVID-19 restrictions ISO 13485:2016 - Medical Device Quality Management Systems 5
O ISO13485 implementation - Are internal audits expected before stage 1 audit? Design and Development of Products and Processes 3
B Using Unreleased Documents & Process Maps for Internal Audit purposes ISO 9000, ISO 9001, and ISO 9004 Quality Management Systems Standards 12
N Small Company - Internal audit process - Who does the audit? Internal Auditing 16
J Does anyone have an excel IATF 16949 Internal Audit checklist I could use? IATF 16949 - Automotive Quality Systems Standard 7
G Addressing Non-Conformances from an Internal Audit that are not product related ISO 13485:2016 - Medical Device Quality Management Systems 11
S Internal audit discrepancy - We missed a few audits that were scheduled Internal Auditing 12
Raffy ISO 14001 9.2.2 Internal Audit Programme Content Internal Auditing 10
N Internal Audit Schedule – Who gets to set the schedule? Internal Auditing 16
V IATF 16949 9.2.2.1 Internal Audit Program - "Process Changes" IATF 16949 - Automotive Quality Systems Standard 11
G Non Conformance During ISO 9001 Audit - Not All Internal Audits Completed General Auditing Discussions 19
B Using external FDA and ISO 13485 audit as internal audit Internal Auditing 6
T Internal Audit Schedule when Hiring Out Internal Auditing 7
D ISO 9001:2015 Internal Audit Training Advice Internal Auditing 10

Similar threads

Top Bottom