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The Perfect audit? External Audit causes a significant negative impact in a company

qualprod

Trusted Information Resource
#1
Hi, everybody
I wonder what it happen if an external audit is performed in a company, but the result of this audit cause a great negative impact in this company (maybe bankruptcy, cancelled contracts, future worldwide negotiations,etc).
From here, what have you seen in this regards:
1- is it possible that affected company starts legal complaints against this auditor because it was not competent not experienced?.​
2 if this is possible, against what will be compared his knowledge because there is not authority who has the absolute reason, knowledge, criteria for audits.​
Here at Cove, have read Many different criteria for audits, and in my viewpoint all can be very acceptable.
In criteria I mean, to raise ncs, ones would coincide to apply same clause while others choose other different, but all auditors may fall into an acceptable criteria.
Could someone tell if have had a case like this?
The question could seem not so common.
Thanks
 
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Ninja

Looking for Reality
Staff member
Super Moderator
#2
Can you give some more detail of your thinking?
How can an external audit directly relate to Corporate bankruptcy or cancelled contracts? You have multiple means of pushing back on any findings prior to the information going public. An external auditor cannot be the cause for loss of public image unless one of two things are also true:

1. The auditor breached their NDA and went public​
2. Your QMS is so bad that the audit claims were true and upheld at higher levels.​
Please give more detail into what you propose or consider...
 

John Broomfield

Staff member
Super Moderator
#3
An auditee would not have a claim if:

1. The audit criteria are agreed (as in self imposed)
2. The audit plan is agreed as sufficient to fulfill the audit objective
3. The evidence of not fulfilling the criteria is agreed
4. The resulting nonconformity statements are correct, complete and clear.
5. The audit conclusion is based only on the audit findings.
6. The auditor remains objective and impartial and offers no advice

By sticking to the auditing conventions, auditors are unlikely to find themselves in court.
 

Ninja

Looking for Reality
Staff member
Super Moderator
#4
An auditee would not have a claim if:

1. The audit criteria are agreed (as in self imposed)
2. The audit plan is agreed as sufficient to fulfill the audit objective
3. The evidence of not fulfilling the criteria is agreed
4. The resulting nonconformity statements are correct, complete and clear.
5. The audit conclusion is based only on the audit findings.
6. The auditor remains objective and impartial and offers no advice

By sticking to the auditing conventions, auditors are unlikely to find themselves in court.
Agreed on on counts...but I still do not see an immediate path to bankruptcy or market challenges...

1. "agreed"...did they?
2. "agreed"...did they?
3. "agreed"...did they?
4. NC statements are NC statements...not pulic disclosure leading to market performance or degradation...are they handled before market exposure?
5. better be...otherwise it is a pushback to CB, still not public exposure
6. If this is in question...should I mention the blind gopher?

It's not about auditor finding auditor in court...the OP is about...
(maybe bankruptcy, cancelled contracts, future worldwide negotiations,etc).
 

John Broomfield

Staff member
Super Moderator
#5
Perfection is not achievable by man so I had to clarify the achievable requirements.

I am waiting to see our OP’s clarification of this manufactured dilemma before commenting further.
 

dsanabria

Quite Involved in Discussions
#6
Hi, everybody
I wonder what it happen if an external audit is performed in a company, but the result of this audit cause a great negative impact in this company (maybe bankruptcy, cancelled contracts, future worldwide negotiations,etc).
From here, what have you seen in this regards:
1- is it possible that affected company starts legal complaints against this auditor because it was not competent not experienced?.​
2 if this is possible, against what will be compared his knowledge because there is not authority who has the absolute reason, knowledge, criteria for audits.​
Here at Cove, have read Many different criteria for audits, and in my viewpoint all can be very acceptable.
In criteria I mean, to raise ncs, ones would coincide to apply same clause while others choose other different, but all auditors may fall into an acceptable criteria.
Could someone tell if have had a case like this?
The question could seem not so common.
Thanks
Not sure if there is enough information to provide an opinion. The only case is that is your system is so bad that the certificate is pulled (and that is not easily done). Don't see a scenario in which an auditor caused you to go bankrupt or close the facility, but feel free to share.
 

Randy

Super Moderator
#7
Hi, everybody
I wonder what it happen if an external audit is performed in a company, but the result of this audit cause a great negative impact in this company (maybe bankruptcy, cancelled contracts, future worldwide negotiations,etc).
From here, what have you seen in this regards:
1- is it possible that affected company starts legal complaints against this auditor because it was not competent not experienced?.​
2 if this is possible, against what will be compared his knowledge because there is not authority who has the absolute reason, knowledge, criteria for audits.​
Here at Cove, have read Many different criteria for audits, and in my viewpoint all can be very acceptable.
In criteria I mean, to raise ncs, ones would coincide to apply same clause while others choose other different, but all auditors may fall into an acceptable criteria.
Could someone tell if have had a case like this?
The question could seem not so common.
Thanks
I've had a couple I led over the last 18 years or so that have created havoc in a couple industries, resulted in leadership changes and so on, but every case it was a self inflicted wound. One I actually got cursed at, escorted to the door with my team of 2 others, told that we were getting reported and would never set foot again in another corporate facility....He's gone, we got a fantastic apology from their #1 Head Dude and the #1 for Global EHS and have been going back for years now. We uncovered some EHS thingy's that if not addressed "NOW" could have shuttered the plant, led to some nasty SOX problems and so on... The plant manager didn't have time during the audit to discuss anything because he was too bust managing "stuff"...So yeah, it can happen and others here can probably say the same.
 

qualprod

Trusted Information Resource
#8
I've had a couple I led over the last 18 years or so that have created havoc in a couple industries, resulted in leadership changes and so on, but every case it was a self inflicted wound. One I actually got cursed at, escorted to the door with my team of 2 others, told that we were getting reported and would never set foot again in another corporate facility....He's gone, we got a fantastic apology from their #1 Head Dude and the #1 for Global EHS and have been going back for years now. We uncovered some EHS thingy's that if not addressed "NOW" could have shuttered the plant, led to some nasty SOX problems and so on... The plant manager didn't have time during the audit to discuss anything because he was too bust managing "stuff"...So yeah, it can happen and others here can probably say the same.
Thanks Randy, good lesson shared
That's a reason why audits are a serious activity.
Depending of the importance and scope, skilled auditors should be chosen.Frequently, we face cases Like You mentioned.
 

tony s

Information Seeker
Trusted Information Resource
#10
I guess Randy's example is the opposite of what qualprod is asking. Randy created a havoc in a couple of industries not because of incompetence;)
 
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