Root cause analysis questionnaire

TABLE OF CONTENTS
03 Root Cause Analysis Overview
04 Follow the Traffic Lights!
06 Awareness: Why is Root Cause Analysis
Needed?
09 Group Activity: Different Root
Causes/Different Recommendations
14 Root Cause Framework (Tools)
24 Group Discussion: Identifying Root Causes
26 Analyzing Root Cause Structure (Tools)
2
39 Root Cause Analysis Questionnaire
40 A Foundation
41 Sourcing Root Causes: An Overview
43 Sourcing Root Causes of Known Performance
Gaps or Deficiencies
45 Sourcing Root Causes of Business Risks
46 The Next Step
47 Other Methods for Sourcing Root Causes

FOLLOW THE TRAFFIC LIGHTS!
4
So let’s follow the traffic lights today, which guide the internal audit
(IA) world!!
Red light
Talk about IA exceptions noticed in past audits, which could have led
client operations to stop.
Orange light
Talk about IA recommendations, which made a client look into the future.
Green light
Talk about IA best practices, which make a client’s internal processes
ready to go.

Our challenge is not so much about identifying the
symptoms, but more about understanding the underlying
root causes.
5

AWARENESS: WHY IS ROOT CAUSE ANALYSIS
NEEDED?
6
It is very critical to reach the deeper root cause rather than rely only on the ones that are visible to
the naked eye.
It is important to distinguish between the
primary or root cause and the
contributing causes in order to develop
the necessary corrective actions to
prevent the problem from reoccurring.
Without thorough investigation of the
problem, you may initiate corrective
action that does not eliminate the
problem, but in turn aggravates it and
leads to a wastage of resources.
Why Is It Important to Determine the Root Cause?

NEEDED?
7
Root cause analysis, if performed adequately in an internal audit, has enormous potential to
positively impact the organization.
06 Protection of the Brand
02 Reduced Complaint Costs
01 Cost Savings Through Issue
Prevention
03 Reduced Penalties
04 Fraud Prevention
05 Improved Public Relations
07 Positive Impact on Corporate Culture
Need for Root Cause Analysis

NEEDED?
Customer X receives goods from Manufacturer Y. The goods are found to be damaged. Manufacturer Y plans to do a
root cause analysis to determine why the products were damaged.
Goods were shipped in packaging trays that allowed
the product to move in the cartons during transport.
Cardboard dividers were not placed
between the trays, which could have
prevented them from moving in the
cartons.
Trays were not designed in a way that
ensures that each item is fixed securely.
Root Cause Analysis
8
Let’s Take an Example…

GROUP ACTIVITY: DIFFERENT ROOT
CAUSES/DIFFERENT RECOMMENDATIONS
9
The following narrative is the account of an
event according to Mary:
It was 5 p.m. when I was frying chicken on my new
electric burner. My friend Jane stopped by on her
way home from the doctor, and she was very
upset. I invited her into the living room so we could
talk. After about 10 minutes, the smoke detector
near the kitchen started to beep. I ran into the
kitchen and found a fire on the burner. I reached
for the fire extinguisher and pulled the plug but
nothing happened. In desperation, I threw water on
the fire and the fire spread throughout the kitchen.
The Case of Mary

10
Root Cause: Determine the underlying root causes.
Causal Factors: Identify the factors that led to the fire.
Recommendations: Develop different
recommendations for different root causes.
Let’s Discuss

11
Causal Factor
Mary leaves the frying chicken
unattended.
Underlying Root Cause(s)
• Mary is alone at home and
there is no one to attend the
door.
• Mary got distracted after
knowing that her friend is
upset.
Recommendations
• Ensure that she never
leaves anything unattended
on the burner.
• If the conversation is very
urgent, Mary should urge the
friend to accompany her in
the kitchen.
Causal Factor 1

12
Causal Factor
The fire extinguisher does not
operate when Mary tries to use
it.
• The extinguisher is not filled.
• Exposure to practical
training on how to use
extinguisher is lacking.
Recommendations
• Ensure that the refilling of
the fire extinguishers is done
periodically.
• Go through practical training
on the use of fire
extinguishers. Classroom
training may be insufficient
to adequately learn this skill.
Causal Factor 2

Causal Factor
Mary throws water on fire.
• Mary forgets that the burner
is electric, and she is not
supposed to throw water on
it.
• Mary did not think to call the
fire department in the first
place.
Recommendations
• Complete training on the first
things to be done in an
emergency situation.
• Ensure that a backup
program is in place in case
the immediate solution does
not work.
13
Causal Factor 3

ROOT CAUSE FRAMEWORK (TOOLS)
14
Categories
Corporate Culture and Values
Customer Focus
People
Information Overload
Performance Measures
Benchmarking
Materials Used in the Process
Plant/Equipment and Technology
Processes and Methods
Categories of Root Causes

Examples of Root Causes
• A clear vision of how people work together in the organization
does not exist.
• The company has no business control standards.
• Managers and employees do not believe performance targets
are realistic, understandable, measurable, believable or
actionable.
15
Corporate Culture and Values

• Processes for understanding and accepting customer
expectations and needs are ineffective or nonexistent.
• Business processes are not continuously improved to
meet/exceed customer expectations and satisfy needs.
• Customer satisfaction is not measured and monitored.
16
Customer Focus

• Individuals performing assigned tasks aren't proficient in the
task or don't meet qualification/certification requirements.
• Training, both formal and informal, is ineffective.
• Ineffective techniques are used to direct and monitor personnel
in the performance of their assigned activities or tasks.
17
People

• Data input and processing is not authorized, complete or
accurate.
• Information databases used in processing transactions are not
current (e.g., they are not complete or accurate).
• Reports are not complete or accurate.
18
Performance Measures

• There are no metrics that enable management and process
owners to continuously improve quality, reduce cost and
compress cycle time.
• For similar tasks and processes, there are consistent
measurable differences, but no one knows about them or why
they occur.
• The company does not benchmark its business processes
against competitors.
19
Benchmarking

• Reports are prepared and information is filed but never used.
• Decision-makers have not evaluated what information is really
needed, why it is needed and the form that is most useful for
decision-making.
• The "command and control" culture encourages non-value-
added activity in the vertical chain of command (e.g., senior
managers get the same level of detail as middle managers).
20
Information Overload

• Materials used do not meet quality specifications, causing
disruptions in the process.
• The process for acquiring the right materials is ineffective or
inefficient.
• The right materials at the right time are unavailable.
21
Materials Used in the Process

• Physical and environmental conditions in the work area do not
support superior personnel and equipment performance.
• The design and configuration of equipment and systems do not
support superior business process performance.
• Equipment or systems are ineffective or inefficient, whether
permanently installed, temporary or portable.
22
Plant/Equipment and Technology

• There are unnecessary or redundant steps in the process that
serve no purpose.
• Too many approvals/signoffs are required before an activity or
a task can begin.
• There are excessive levels of inventory, cash, people and other
assets.
23
Processes and Methods

GROUP DISCUSSION: IDENTIFYING ROOT CAUSES
24
The public company board (PCB)* is reporting on an audit carried out by Audit Company
ABC. They discover some deficiencies in the audit carried out by Company ABC, such as:
• Obtain sufficient evidence to support its recommendations/opinion.
• Sufficiently test the system generated data and reports that supported critical controls.
• Sufficiently test the design and operating effectiveness of management’s review
controls.
PCB performs a root cause analysis to diagnose the causes that would have contributed
to these deficiencies.
Company XYZ performed a root cause analysis to diagnose the causes that would have
contributed to these deficiencies.
Let’s discuss and look at the various root causes for such deficiencies!
*Illustrative
Case Study

GROUP DISCUSSION: IDENTIFYING ROOT CAUSES
25
An improper application audit of internal controls
was conducted as required by auditing standards.
A
The audit firm was short staffed, causing
deployment of inexperienced resources on the job.
B
Not enough questioning about the data was used to
develop system-generated reports.
C
Analysis of the firm’s risk and controls was
insufficient.
D
Root Causes

26
The key tools which can be used to perform root cause analysis are:
SIPOC (Suppliers –
Inputs – Process –
Outputs – Customers)
Flowcharting
Fishbone (Cause and
Effect) Diagram
Interrelationship
Diagram
Five Whys
Note: This is not a thorough list as other tools may also be used.
Tools for analyzing Root Causes
ANALYZING ROOT CAUSE STRUCTURE (TOOLS)

27
Real solution is
found here
Why?
Why?
Why?
Why?
Why?
What is it?
• Establish methods for pushing
people to think about root causes.
• Prevent the team from settling on
superficial solutions that won’t fix
the problem in the long run.
• Ask “Why does this outcome
occur?”
• Select one of the reasons and ask
why again.
• Continue this way until you reach a
potential cause.
• Stop when you reach a potential
cause the group can act on.
The Five Whys

ANALYZING ROOT CAUSE STRUCTURE (TOOLS): FIVE
WHYS (1/2)
Example 1
28
Consider the case of a company facing problems from high employee turnover. Below is an example of how the Five
Whys technique can be applied in this case:
High Employee Turnover
Employees are unhappy/dissatisfied.
Employees are allocated jobs a certain way. Employees are uninterested in their job profiles.
Employees are not being allocated assignments that
allow them to realize their true potential.
Employees are assigned extremely routine tasks,
which require no further learning or scope for
development.
HR policies are inadequate. HR policies are inadequate.
Employees are not given enough flexibility to do their
jobs. Very strict procedures limit their potential output.
(Root cause).
Management is not focused on retaining and
developing employees. Employees are only hired for
the current requirement, and no thought is put into
developing them into future employees to serve other
functions of the firm. (Root cause).
Why?
Why?
Why?
Why?
Why?
Why?
Why?
Why?

WHYS (2/2)
The Five Whys analysis postulates that behind every supposedly technical problem is actually a human problem.
Applied to a startup, here's how it works:
A new release broke a key feature for customers.
A particular server failed.
A subsystem was used in the wrong way.
The engineer who used it didn't know how to use it properly.
The engineer was never trained.
The engineer’s manager doesn't believe in training new engineers,
because they are "too busy.”
Why?
Why?
Why?
Why?
Why?
What began as a purely technical fault is quickly revealed to be a very human managerial
issue.
Example 2
29

ANALYZING ROOT CAUSE STRUCTURE (TOOLS):
FISHBONE DIAGRAM (1/4)
What is it?
• The fishbone diagram is a pictorial
representation of the relationship between an
effect and potential causes that could have
created it.
• The diagram helps isolate the underlying forces
that can affect a work process so that they can
be examined and understood.
• Brainstorming is majorly used to identify the
factors that may be affecting the problem or
issue.
• The fishbone diagram is also known as the
Ishikawa diagram.
Step by Step Process
• Brainstorming as many causes as possible
and help in developing the cause-and-effect
diagram.
• Start placing the causes under each category in
the basic diagram. If they seem to fit under
more than one category, feel free to put them
under all possible categories.
• Add additional categories, such as systems,
organizations or designs, as the brainstorming
process continues.
• Use directed brainstorming to help develop
the identified causes in further detail and to
develop important ideas that will enhance the
team’s understanding of the problem.
30

Cause 1 Cause 2 Cause 3
Cause 4 Cause 5 Cause 6
Issue/Problem
Sub-Cause 1
Sub-Cause 2
Sub-Cause 1
Sub-Cause 2
Sub-Cause 1
Sub-Cause 2
Sub-Cause 1
Sub-Cause 2
Sub-Cause 1
Sub-Cause 2
Sub-Cause 1
Sub-Cause 2
31

Consider the case of a company facing problems from high employee turnover.
What can be the high-level factors that are causing high employee turnover?
Within each of these high-level factors, what are the subfactors contributing to
the high employee turnover?
32
Example 1

Through this diagram, you can identify what components of the organization need to be given attention to in order to
reduce the high employee turnover.
Diversity is lacking.
Management Location
Marketplace Benefits
Management is not
flexible enough.
Retention is not the
main focus.
Locations are
hard to drive to.
Locations are
small towns/rural
areas.
Workers are in high
demand.
Salaries are getting
higher.
Base salaries are
too low.
A 401K does not exist.
High employee
turnover
33
Example 2

What is it?
• The visual display, which maps out
the cause-and-effect, links among
complex, multivariable problems or
outcomes.
• The display is useful when
examining specific issues and
general organizational problems.
• In a situation in which a project
team cannot agree on what critical
issues to track, the interrelationship
digraph could be just the tool to
bridge that gap.
• The display allows a team to
identify root causes even when
credible data doesn’t exist.
Entry errors at service
counters are not
detected.
Staff is under pressure.
This is how an Interrelationship Diagram looks:
Customer
response is low.
Customer queue
is always long.
Staff is being
interrupted by other
staff.
Blind touch key
entries occur.
A
D
C
E
The reason with the maximum number of arrows going
out is the root cause.
Problem:
Error in customer’s monthly statement
F B
34
Interrelationship Diagram

The lamp doesn’t
work
Repair the lamp.
Plug in the lamp.
Replace the bulb.
Is the
lamp
plugged
in?
Did the
bulb
burn
out?
No
Yes
Yes
No
This is how a flowchart looks
35
What is it?
• A flowchart is a step-by-step
diagram that uses symbols and
lines to examine the sequence and
relationships among activities
within a process.
• You may use it when you want to:
− Analyze the process surrounding
the problem.
− Determine which activities may
cause the problem.
Flowcharting

What is it?
• SIPOC is an acronym for
Suppliers – Inputs – Process –
Outputs – Customers
• This tool is used to give a detailed
overview of a process and identify
all relevant elements of the
process completion, which gives a
high-level understanding of the
process.
• It also provides a structured way of
analyzing the root cause of
problems by breaking down the
process into different key
elements.
• This is important to root cause
analysis in order to fully
understand the process and
potential causalities.
Suppliers Customers
Inputs Outputs
Process
S I P O C
36
SIPOC

WHYS TEMPLATE
Step 1: Define the Problem
Step 2: Ask Why
Step 3: Root Cause
The manager is not periodically checking the status of the stock.
Why 1:
Why 5:
Why 4:
Why 3:
Why 2:
Answer 1:
Answer 5:
Answer 4:
Answer 3:
Answer 2:
37
Group 1

WHYS TEMPLATE
38
Step 1: Define the Problem
Step 2: Ask Why
Step 3: Root Cause
Why 1:
Why 5:
Why 4:
Why 3:
Why 2:
Answer 1:
Answer 5:
Answer 4:
Answer 3:
Answer 2:
Group 2

A FOUNDATION
40
Successfully sourcing the root causes of performance gaps and business risks for a business process requires
a strong foundation. Common elements of such a foundation include:
• A process map that documents its key activities
• A set of customer-driven performance measures, which are used to monitor the key activities
• A process owner, sponsor or champion charged with responsibility for the efficiency and effectiveness of the
process
• A cross-functional process team that meets regularly to identify process improvements and assumes
ownership for implementing them
• An annual business plan, which includes the expected results, objectives, budget and nonfinancial resource
requirements of the process
• Mechanisms to monitor process performance on an ongoing basis (such as process control charts)
Companies having these elements in place for a given business process will have a stronger foundation for
sourcing root causes than those that do not.

SOURCING ROOT CAUSES: AN OVERVIEW (1/2)
41
The approach to sourcing root causes depends on whether you are investigating known performance gaps or
deficiencies (i.e., actual adverse consequences) or business risks (i.e., potential adverse consequences).
In the first case, an adverse event has actually occurred (i.e., something has gone wrong). For example, the
company may have lost a major customer and there may be many customer complaints and product failures.
Management wants to know why these events are happening, so they can take the necessary steps to prevent
the loss of other customers.
Sourcing the root causes of these events is a performance assessment activity. Performance assessment
involves:
• Measuring and evaluating process performance, as reflected in one or more performance measurements
• Sourcing the root causes of known performance gaps or deficiencies
• Determining ways to improve process performance
In the second case, an adverse event could occur (i.e., something could go wrong). For example, the company
may lose major customers and market share if it fails to meet the customers' needs and wants. Management
wants to prevent this risk from becoming a reality.
Sourcing the root causes of potential adverse consequences is a business risk assessment activity. Business
risk assessment involves:
• Identifying the potential adverse consequences of not achieving key business objectives
• Measuring the significance of these potential adverse consequences

SOURCING ROOT CAUSES: AN OVERVIEW (2/2)
42
• Sourcing the risks (i.e., identifying the root causes) that threaten the achievement of key business objectives
and, therefore, could cause significant adverse consequences
• Assessing the relative importance of these root causes and the likelihood that they will lead to significant
adverse consequences
Sourcing the root causes of actual adverse consequences is relatively straightforward because it begins with the
identification of facts about significant performance gaps or deficiencies. Typically, such adverse events will be
reflected in one or more business process performance measurements. On the other hand, sourcing the root
causes of business risks begins with the identification of key business process objectives. Sourcing the root
causes of adverse events that could occur will be an esoteric activity for most people unless the business
objectives and corresponding consequences can be translated into meaningful performance measures.

SOURCING ROOT CAUSES OF KNOWN
PERFORMANCE GAPS OR DEFICIENCIES (1/2)
43
Use the following questions as a starting point for sourcing the root causes of actual performance gaps or
deficiencies:
• What really happened? (i.e., What performance gap or deficiency has been identified?)
It is very important that effort is focused on the right problem.
• What was the damage or consequence?
The significance or order of magnitude of the consequences needs to be understood. Studying the effect of a
problem can provide insight as to its real nature and source.
• What was different about the process when the problem occurred?
Answers to this question can provide insight into why the adverse event occurred, particularly if the first
occurrence can be isolated and understood.
• What really went wrong? (i.e., What conditions caused the adverse event?)
It is important to separate "symptoms" from root causes when evaluating process performance and
investigating performance gaps or deficiencies.
• Were there controls in place that should have prevented the adverse event?
This may help isolate control points in the process or system where controls do not exist or are not
performing as they should.
• Did the process perform the way it was supposed to perform?
If the focus is on whether people did what they were supposed to do, this will be a difficult question for many
organizations. Generally, it is better to focus on process deficiencies rather than human deficiencies.
However, there will be circumstances where accountability cannot or should not be avoided.

SOURCING ROOT CAUSES OF KNOWN
PERFORMANCE GAPS OR DEFICIENCIES (2/2)
44
• Did any event or action prevent a worse situation?
Answers could provide insights as to possible actions that should be taken to prevent similar problems in the
future.
• Has the same problem happened before? If so, what, if anything, was done to fix the problem?
These questions will provide further insight as to the nature of the problem as well as the effectiveness of
prior corrective and preventive actions taken.
• Who reported the problem?
This question will provide insights to problems with existing controls and the monitoring and reporting system
itself. Was the person who reported the adverse event the one who should have first noticed it?

SOURCING ROOT CAUSES OF BUSINESS RISKS
45
Use the following questions as a starting point for sourcing root causes of business risks:
• What are the measurable objectives of the business process?
This is a critical first question because it establishes the context for what is important and what is not. It may
be necessary to validate the answer to this question against customer and stakeholder needs and
expectations. (i.e., Who are your customers? What do they want? How do you know?)
• What are the measurable consequences of not achieving each business process objective?
The significance or order of magnitude of the potential consequences needs to be understood. Only those
objectives that have significant, measurable consequences will be analyzed further as to the potential root
causes.
• What can go wrong in the process to prevent the process from achieving the important objectives?
Answers to this question focus on the points within the business process that could contribute to process
failure. It is important that business risks be sourced to conditions that actually exist at the time of the
investigation. Considering hypothetical root causes serves no useful purpose.

THE NEXT STEP
46
Sourcing root causes of actual adverse consequences (i.e., known performance gap or deficiencies) is vital to
business process improvement. It establishes the basis for other performance assessment activities. Once the
root causes of known performance deficiencies have been identified, steps can be taken to eliminate the root
causes and design and implement business controls to prevent their reoccurrence in the future.
Sourcing root causes of potential adverse consequences (i.e., business risks) is also an important assessment
activity. It establishes the basis for other risk mapping and control assessment activities. Once the root causes
of business risks have been identified, steps can be taken to:
• Assess the relative likelihood that the various root causes will, in fact, lead to significant adverse
consequences.
• Evaluate the effectiveness of existing controls in reducing significant business risks to an acceptable level.
• Install controls at points in the business process where they currently do not exist or are not operating
effectively.
• Eliminate controls that are not cost-beneficial.

OTHER METHODS FOR SOURCING ROOT CAUSES
47
There are other methods, unstructured and structured, for sourcing root causes of business risk. Unstructured
methods used by experts or teams of experts include:
• Intuition
• Networking
• Experience
• Business process analysis, including process flow mapping
• Process self-assessment
• Process control charts
• Trend analysis
• Pareto charts
• Fishbone diagrams
• Nominal group techniques
• Brainstorming
More structured approaches include:
The objective is to identify the root causes of the risk at specific points within the process so that the appropriate
process improvements and business process controls can be implemented.

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