Outsourcing Internal Quality Auditing functions

V

vramc

#1
Although organizations consider that the third-party ISO 9001 Annual Surveillance Audits provide independence, integrity and value, their outcome is often simply permission to conduct business as usual. Competitive cost pressures have created a commoditized, streamlined environment where these audits focus narrowly on adherence to specific quality, safety, environmental or financial standards. As a result, these audits too often leave companies with a handful of persistent performance problems and unidentified business risks that can erode shareholder value.

In respect of Internal Quality Audits the companies find that the findings initiated by their own company’s employees, trained as internal auditors, were minor and did not add any value. Findings were of the document control type, incomplete tags which didn’t move the company towards continuous improvement activities. These findings simply weren’t important to them.

There is an option of making this Internal Auditing more effective, more value-adding and providing a business overview- outsourcing this function.
In the paper and presentation seen at the ASQ Audit Conference in October, 2008, “Effective Internal Audits: Is Outsourcing the Answer?” Denis Devos reveals results of his study which shows that “there is a growing tendency for organizations to rely on the services of professional auditors to perform audits”. In his study, Denis completed a survey of 155 companies. 76% - 86% (nonautomotive companies vs. automotive companies) of the companies surveyed had outsourced the internal audit function, even though there was an “internal” audit team in place.

Today, experienced auditors go beyond the conformity by identifying levels of compliance with – and the effectiveness of – a company’s own established best practices, management processes and business excellence framework. The detailed, customized analysis generated, gives business leaders genuine insight into how effectively their current business management systems are performing and how they can use them to create even more value for customers and shareholders. Importantly, they also provide a road map for the continual improvement that many standards require and that is necessary to build and maintain competitive advantage.

Can this be an effective tool for measurement of performance excellence

Pl comment
 
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R

Richard Pike

#2
Can this be an effective tool for measurement of performance excellence

Pl comment

A very interesting piece.

Can I use it in the marketing of my services?


Seriously though, providing the service is contracted to experienced and competent auditors, with a solid understanding of the organizations business plan, then in my opinion it is the way to go.

One does have to be cautious about the auditors concept of "performance excellence" as this is subject to the objectives of the organization normally expr4essed through their business plan.

Again in my opinion, the contracted Internal Auditor should be more "qualified" than a typical third party auditor whose services should perhaps be avoided as they tend to (by the nature of their function) be "compliance" orientated. (naturally all the long standing third party forum members are fully exempt from this statement):rolleyes:
 

Jen Kirley

Quality and Auditing Expert
Staff member
Admin
#3
It is my opinion that outsourcing isn't the criteria for effectiveness; it is who is doing the auditing and the system in which the function is being performed. I will suggest, however, that as a member of the company I audit I feel like a stakeholder int he process's success. I also provide continuity, and can "connect the dots" from one audit to the next, even for things that don't get written down.

Of course my opinion is colored by the fact I enjoy being gainfully employed, with benefits, in a place where my customers (most anyway) seem to genuinely appreciate what I do.
 
J
#4
It seems to me that outsourcing internal audits have certain advantages and disadvantages.
The advantages are that the experienced, "outside eye", can spot things thet "familiarity" with the system might miss. Also, if a company were to team internal auditors with external ones, the overall competance of the "employee auditors" can be raised significantly.

The disadvantage could be that, not knowing just how a system functions, an outside eye might spot problem where they really don't exist. Something that an experienced inside eye might recognize.

Probably the biggest advantage to outsourcing, for smaller companies, would probably be convenience. That is - not needing to pull people from other tasks to perform auditing.

2 cents duly deposited

Peace
James
 
V

vramc

#5
Hi, Thanks for the prompt responses
Actually, i had placed the idea as a prelude to a few larger initiatives, which a company can think of. Based on the results of Internal Auditing, the company can embark on moving towards a fully comprehensive Performance Evaluation of the company involving all the functions including Financial functions. I had this opportunity and hence I wanted to share in this forum
I agree with one of the comments, that the Auditor must really be more competent than the regular Certification assessors.
I had recently did an Internal Quality Auditing of about 65 functions ( as an external Auditor) in a large organization and now I have an opportunity to cover Commercial and financial functions even though they are not under the scope of certification
And hence this topic had been posted
Yes, it really works and be effective
Thanks
 
I

itay26

#6
Hallo.
There is a point there. The problem lies always by internal auditors that need to audit their own colleagues… Internal Audit is anyway a stressful event because people are being criticized by the management. The auditor must keep loyal to his (or hers) objectives but the auditees are his colleagues… Can you see where I am getting? I served for four years as an external consultant and auditor for various companies. Once the service of internal audit is efficient, the added value increases. In some cases the management almost "kissed my legs" (just kidding…) The outsource auditor has obligation only for the contract and nothing more. Instead of covering things he is eager to reveal more…
 

Jen Kirley

Quality and Auditing Expert
Staff member
Admin
#7
Hi, Thanks for the prompt responses
Actually, i had placed the idea as a prelude to a few larger initiatives, which a company can think of. Based on the results of Internal Auditing, the company can embark on moving towards a fully comprehensive Performance Evaluation of the company involving all the functions including Financial functions. I had this opportunity and hence I wanted to share in this forum
I agree with one of the comments, that the Auditor must really be more competent than the regular Certification assessors.
I had recently did an Internal Quality Auditing of about 65 functions ( as an external Auditor) in a large organization and now I have an opportunity to cover Commercial and financial functions even though they are not under the scope of certification
And hence this topic had been posted
Yes, it really works and be effective
Thanks
I think that a well-designed and robustly managed cross-functional audit team of employees can accomplish the same thing. I expect to be working on such a plan for my employer this summer.
 
V

vanputten

#8
If the people leading product realization are not effective or competent, should we outsource that too? What about leadership?

Or maybe instead of outsourcing, we should look at the process of internal auditing and determine and ensure competency of internal auditors.

First we must ensure that all tools (including knowledge and understanding) have been attained. Then we can analyze outsourcing.

But to simply state that often internal audit is not effective, therefore we should consider outsourcing seems to me to be jumping some thought processes. If an organization put as much effort into the effectiveness of internal audit as any other key processes, then we might have something to debate.

I am the Corporate Internal Auditor for a 1,100 person organization.
 
T

trainerbob

#9
If we would spend as much time training our internal auditors to be effective as we do our production and/or service people we would find that effective internal auditing is one of the better processes which help our organizations move forward. Top management needs to understand the role of a truly effective internal auditor as well as the role they play in the support process for the auditors. Quite ofted this is sorely lacking.
Having said all that, I am also a strong proponent of outside auditors working with an organizations internal auditors for all of the reasons mentioned earlier in this thread.
 
#10
If we would spend as much time training our internal auditors to be effective as we do our production and/or service people we would find that effective internal auditing is one of the better processes which help our organizations move forward. Top management needs to understand the role of a truly effective internal auditor as well as the role they play in the support process for the auditors. Quite ofted this is sorely lacking.
Having said all that, I am also a strong proponent of outside auditors working with an organizations internal auditors for all of the reasons mentioned earlier in this thread.
True, Bob, however I'd like to add that it's the management of the audit process - over and above the basics of auditing - that needs to improve before management will support this! While those responsible for the audit program go without any formal training and qualification, they won't be able to address the effectiveness of the audits in a way that management can get behind.
 
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