CS
Uploaded bycarroll sams
PPT, PDF1,641 views

Fundamentals of Auditing PTC

The document provides an overview of quality auditing and the audit process. It discusses the four phases of an audit: 1) initiation and preparation, 2) on-site evaluation, 3) reporting, and 4) closure. The preparation phase involves developing an audit plan, checklist, contacting the auditee, and conducting a desk audit. The on-site phase consists of an opening meeting, tracing techniques to collect evidence, and briefing the auditee. The reporting phase includes an exit meeting and a formal written report. The closure phase tracks actions to address nonconformities.

Embed presentation

Downloaded 46 times
1 / 108
2 / 108
3 / 108
4 / 108
5 / 108
6 / 108
7 / 108
8 / 108
9 / 108
10 / 108
11 / 108
12 / 108
13 / 108
14 / 108
15 / 108
16 / 108
17 / 108
18 / 108
19 / 108
20 / 108
21 / 108
22 / 108
23 / 108
24 / 108
25 / 108
26 / 108
27 / 108
28 / 108
29 / 108
30 / 108
31 / 108
32 / 108
33 / 108
34 / 108
35 / 108
36 / 108
37 / 108
38 / 108
39 / 108
40 / 108
41 / 108
42 / 108
43 / 108
44 / 108
45 / 108
46 / 108
47 / 108
48 / 108
49 / 108
50 / 108
51 / 108
52 / 108
53 / 108
54 / 108
55 / 108
56 / 108
57 / 108
58 / 108
59 / 108
60 / 108
61 / 108
62 / 108
63 / 108
64 / 108
65 / 108
66 / 108
67 / 108
68 / 108
69 / 108
70 / 108
71 / 108
72 / 108
73 / 108
74 / 108
75 / 108
76 / 108
77 / 108
78 / 108
79 / 108
80 / 108
81 / 108
82 / 108
83 / 108
84 / 108
85 / 108
86 / 108
87 / 108
88 / 108
89 / 108
90 / 108
91 / 108
92 / 108
93 / 108
94 / 108
95 / 108
96 / 108
97 / 108
98 / 108
99 / 108
100 / 108
101 / 108
102 / 108
103 / 108
104 / 108
105 / 108
106 / 108
107 / 108
108 / 108
FUNDAMENTALS OF AUDITING Carroll Sams Reference: FUNDAMENTALS of QUALITY AUDITING By B. Scott Parsowith
Contents Chapter 1 Overview of Quality Auditing 1 Chapter 2 Audit Definitions and Applications 9 Chapter 3 Phase 1--Audit Initiation and Preparation 26 Chapter 4 Phase 2--Performance of an Audit: On-Site Evaluation 40 Chapter 5 Phases 3 & 4--Reporting and Closure Phases 55 Chapter 6 Establishing the Framework for an Audit Program 64 Chapter 7 The First Seven Elements of a Quality System 69 Chapter 8 The Second Seven Elements of a Quality System 78 Chapter 9 The Final Seven Elements of a Quality System 87 Chapter 10 Statistical Process Control 96 Chapter 11 Statistical Sampling for Auditing 102
Chapter 1 Overview of Quality Auditing 1
Audit Overview • Auditing is an art and a science. • Audits are snapshots in time. • Audits should not be confrontations. • Auditors investigate, verify, and confirm. • The audit should be used as a tool for continual improvement of the quality management system. 2
Auditor Knowledge • Quality management system requirements • Product specifications • Process procedures • Investigation techniques • Sampling techniques • Communication techniques 3
Auditor Traits • Observant • Honest • Investigative • Questioning • Through • Communicative • Adaptable • Cooperative • Polite • Professional • Persistent 4
Two Types of Quality Standards • System standards – Examples • ANSI/ISO/ASQ Q9000 standards • QS-9000 automotive standards • ISO 14000 environmental standards • Product standards (specifications) – Examples • Chemical and physical property requirements • Dimensional tolerances 5
Review and Verify Documentation, Implementation, and Effectiveness of • Policy manuals • Procedure manuals • Work instructions, drawings, etc. • General quality management system requirements • Individual product specifications 6
Audits Can • Enhance internal quality management systems • Be part of continual quality improvement efforts • Help establish trusting relationships internally and externally • Find problems before someone else does! 7
Audits Are Not • Acceptance of product • Punch lists • Public hangings • Fault Finding • Ill-prepared • Antagonistic • Biased • Rambling 8
Chapter 2 Audit Definitions and Applications 9
What Is an Audit? • ANSI/ISO/ASQC Q10011-1- 1994: “A systematic and independent examination to determine whether quality activities and related results comply with planned arrangements and whether these arrangements are implemented effectively and are suitable to achieve objectives.” • Quality Applications: – System audit – Process audit – Product audit 10 I II III
Institute of Internal Auditors • Definition from IIA – “Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes.” 11
Additional Audit Terms • Compliance audit – Compliance to standards – Review of processes – Review of data • Operational audit – Time studies – Work studies • Readiness review by internal management – ANSI/ISO/ASQ Q9000 system • Management review – Processes, procedures, & controls • Survey – Comprehensive evaluation 12
System Audit Definition “ A documented activity performed to verify, by examination and evaluation of objective evidence, that applicable elements of the quality management system are appropriate and have been developed, documented, and effectively implemented in accordance and in conjunction with specified requirements.” 13
Types of Audits • Internal audits – First-party audits • Management system audits • Self-assessments • External audits – Second-party audits • Sister company audits • Supplier audits – Third-party [extrinsic] audits • ABS Registrar audits • OSHA Safety audits • KPMG Accounting audits 14
Types of Audits (continued) • Survey – Comprehensive evaluation of facilities, resources, economic stability, personnel, capability • System audits – Verification that a quality management system exists and is being followed • Process audits – Verifies procedures exist, correct, & are being followed under standard, rushed/adverse conditions • Product audits – Verifies inspector capabilities and correct use of specifications 15
Hierarchy of Audits Survey System audit Process audit Product audit 16
Characteristics of Audits • Are independent of doer – Performed by a person not responsible for production or services in area being audited • Have measurement criteria – Specifications (quality management system and product requirements) – Attribute data (good/bad) – Variables data (actual measurements) 17
Characteristics of Audits (continued) • Are performed by competent personnel – Trained audit team members • Are cost effective – Prevention of problems • Are samples of the system – Isolate one small moment in time. – Represent the total population • Must be sure the sampling procedure is correct. – Avoid making incorrect assumptions 18
Two Types of Sample Process Errors • Type I error (alpha error) – We assume something is unacceptable when it is actually acceptable • Producer’s Risk • Type II error (beta error) – We assume something is acceptable when it is actually unacceptable • Consumer’s Risk • Sample consideration – Size, amount, location, & errors 19
Use of Audits • Continual improvement efforts – Internal and external • Benchmarking • Value-added suppliers • Certification – Internal (quality management system) – External (suppliers) Note: Do not use audits alone to determine acceptance of product. 20
Why Audit? • Competition – External--We want low-cost, high- value suppliers – Internal--We want to verify our systems are adequate/effective • Regulation – Imposed by customers – Self-imposed – General quality standards or internal quality standards • Self-preservation to audit ourselves before someone else does – OSHA 21
Audits Improve Performance if They • Meet management needs – Provide feedback on areas needing improvement • Provide a forward look in time – Can predict where process controls or product measurements are needed • Measure effectiveness and compliance to internal and external policy and contract requirements 22
Who Is the Customer? • There are three customers (clients) we must satisfy on each audit. – Auditee • Person being audited (internal or external) – Boss or manager • Give authority to perform internal audit – Buyer of the service (client) • Buyer of service on external audit 23
What Managers Do • Responsible for entire system and its various processes • Continual process improvement – Plan – Do – Check (Study) • audits address the “check” function of the cycle by checking and monitoring a system – Act Plan DoCheck Act 24
Audit Administration • Formal audit procedures – Initiation and preparation 25% • Areas to be audited • Team composition and training • Notification of auditee • Checklist development • Transportation – On-site audit performance 50% – Reporting and closure 25% • Audit report • Audit records • Tracking and closure 25
Chapter 3 Phase 1 -- Audit Initiation and Preparation 26
Audit Initiation Phase • Audit initiated by client – Develop audit plan • Lead auditor (audit manager) and client (approves) • Time allocated for audit – Client • Determine need for audit • The purpose of audit • The type of audit • The objectives of audit – Lead auditor • Scope of the audit 27
The Preparation Phase • Items to be covered in the audit plan, which must be defined: – Objective [purpose, manuals, procedures, work instructions] – Scope [facility, product, process, system elements, departments] – Resources [trained auditors, technical expertise, team size] • Length of audit = < 500 employees: 1-3 days 500-1000 employees: 4-5 days – Initial contacts – Checklists – Past history 28
Lead Auditor Responsibilities • Prepare the audit plan – 50% of work • Select the audit team – Based on plan • Brief the audit team – Safety issues – Brief auditee • Submit a report – 2 weeks maximum 29
Desirable Auditor Characteristics • Knowledge – Quality, production, engineering & procurement – requirements – techniques • Open-mindedness • Patience • Interest • Tenacity • Professional attitude/integrity • Good listening skills 30
Desirable Auditor Characteristics [continued] • Inquisitiveness • Good verbal/written skills • Analytical skills • Honesty • Ethics • Diplomacy • Good planning skills • Experience • Objectivity • Empathy 31
Auditor Musts • Knowledge of: – Verification techniques • Show me… • Objective evidence – Standards – Sampling techniques – Human nature • Four faces of Frank – Time management • You are in control 32
Undesirable Auditor Characteristics • Argumentative • Opinionated • Lazy • Easily influenced • Inflexible • Impulsive--jump to conclusions • Gullible • Uncommunicative • Devious • Poor at planning • Unprofessional 33
Contact the Auditee • Informal contact – Date – Purpose – Scope • Formal contact by letter/memo – Time and date of audit – Purpose – Scope – Activities to be audited – Interfacing organizations – Applicable quality requirements – Identification of team members – Preliminary schedule 34
Perform Desk Audit • Review quality system documentation of auditee – Policy Manual/Procedures • Determine what control systems are in place – What facts are available? • What is the product? – Become familiar with product • Review prior audits • Investigate exemptions or waivers • Review performance history 35
Develop Checklists that Provide: • Structure – Define before audit/use team • Required coverage – Not designed to stifle creativity. • A communication document – A prompt to your next question. • A place to record data – Objective evidence is required for anything less than satisfactory. • Help in time management – Pace of the audit 36
Auditors--Points to Consider • Auditors can use: – Canned checklists – Yes/no checklists [attributes] – Rating checklists [variables] • Things to consider when developing checklists: – What is process during normal operations? • Rushed conditions? • When there is a problem? 37
Summary of the Preparation Phase • Define the audit objective • Establish the audit scope • Allocate resources • Contact the auditee • Develop checklists • Review history • Understand the process and control systems 38
Results of the Preparation Phase • Audit plan – auditee, purpose, scope, activities to be audited, team, standards • Checklist questions • Items and reference location of each requirement • Initial evaluation – Based on documentation received • Desk audit • Past audit results • Plan for action – Areas needing attention/audited 39
Chapter 4 Phase 2--Performance of an Audit: On-Site Evaluation 40
The Performance Phase • Hold opening meeting • Conduct on-site audit • Review controls of quality management system • Verify that the system is working – Is it documented, implemented, and effective? • Share information 41
The Opening Meeting • Must have: – Entire audit team present – Auditee’s plant manager/staff • Requires two-way communication – Trade introductions – Restate objectives – Form initial impressions – State any areas of concern – Settle logistics; space, lunch, etc. • Should take no more than 30 minutes 42
The Opening Meeting [continued] • If needed: – Allow 15 minute maximum for auditee to present quality management system enhancements • Distribute the checklist(s) • Define the audit schedule • Be on time 43
On-Site Evaluation • Auditors can be compared to florists: – Collects evidence [flowers] – Puts it on worksheets [baskets] – Arranges the data [flower arrangement] – Delivers the report [delivers flowers in baskets] 44
Causes of Quality Issues • Lack of top management support • Lack of organization • Lack of training • Lack of discipline • Lack of resources • Lack of time • Lack of teamwork • Lack of knowledge • Lack of consistency – Look for symptoms of these issues 45
Evaluating Information • Formal [documented] control systems vs. Informal [understood/verbal] control systems – Does top management believe in quality and are these beliefs communicated throughout the organization? – Is the control system used by management? – Is the control system adequate? • Are key variables identified? – Is the control system working? • How is it monitored? 46
Verification Methods • Three primary methods used: – Tracing – Corroboration – Sampling [discussed in Chapter 11] A Contract Random Horizontal Vertical 47
Tracing Techniques • Techniques of tracing – Contract -- Series of audits performed on a contract as the contract progresses [2nd party] – Random -- Review what is taking place at time of audit [3rd party] – Horizontal • Backward -- From the end of process [1st, 2nd, 3rd party] • Forward -- From the beginning of process [1st, 2nd, 3rd party] • Middle -- Backward or forward from some critical point in process [1st, 2nd, 3rd party] 48
Tracing Techniques [continued] • Vertical -- Reviews management layers for elements such as quality goals and quality communications • Departmental -- Reviews numerous quality elements within a department • Element -- Reviews a quality element in various departments 49
Corroboration • A statement is not a fact until it is corroborated by someone else or is verified by a document. – The facts must agree: • Two different auditors • Two different records • Two different interviews – Combination of the above • Tie conclusions to what is tangible – Qualitative [some documents reviewed did not have…] – Quantitative [out of 50 documents reviewed, 5 were found to have…] • Forms, records, procedures 50
Sources of Data Collection • Physical evidence – Reinspect, retest, recheck – Documentation and records • Sensory observations – Rusty parts – Nonconforming parts stored with good parts – Observation of tasks being performed • Comparisons and relationships – Patterns and trends • Interviews and questions – Valuable source of information – No place for sexism or biases 51
Effective Interviews 1.Put person at ease. – Your presence is threatening. 2. Explain your purpose. – Demonstrate competence. 3. Use proper questioning techniques. – Ask open-ended questions. – Use “pregnant pause”. – Ask why five times/five w’s. 4. Analyze and verify what is said. – Verify a claim. – Write notes out loud/no secrets. 5. Explain your next step. – Conclude cordially. 52
Brief the Auditee During the Audit • Short and to the point – Discuss verifications and concerns – About 5-10 minutes – In each area as you progress through the facility 53
Auditor Team Meetings • Informal – End of each day with audit team • Auditor sharing – Facts, conclusions, problems • Replanning – Changes to the audit schedule • Reporting – Preliminary audit results • Status of the audit or areas covered – Areas completed, areas to be examined, concerns & issues 54
Chapter 5 Phases 3 and 4--Reporting and Closure Phases 55
Reporting Phase • Informal report – Exit meeting--60 minutes • Formal report – Written & distributed within two weeks after the audit “Clear and precise reports” • Statements of noncompliance contain – Requirement – Location – Evidence – Finding(s) 56
The Exit Meeting • Same people as opening meeting • Lead Auditor presents summary • Disclaimer about sampling • Lead auditor reads findings • Explain follow-up and corrective action response process. 57
Findings • Observation – Write what you were doing. • “While auditing Purchasing I found drawings for new suppliers were not being marked on form…” • Attribution – Restate system’s deficiencies relating to the standard or written documentation of company. • “This is a finding against Procedure P01-01 which requires all new drawings sent to suppliers…” • Explanation – Explain why this is a finding • “The drawing must be recorded to ensure supplier has latest version.” 58
Degree of Severity of Findings • The report should order findings by their importance. – Major finding--conflict with contractual or procedural requirements. [6 maximum] – Minor finding--Isolated observations in conflict with contractual or procedural requirements. [6 maximum] – Concerns--Observations that may not be part of the required quality management system, but are worthy of further consideration. 59
Content of the Formal Audit Report • Formal audit report from audit team to client should include: – Purpose and scope of audit – Participant’s names – Background information – Summary of the results – Identified weaknesses in order of importance – Date and signature of lead auditor 60
The Closure Phase • Auditee has 30-45 days to respond with plan of action. • Auditee’s corrective action evaluated. • Formally close corrected items. • Items requiring on-site verification are reaudited. • Letter of closure issued. • All documentation filed. 61
Retention of Audit Documents • “Working papers” should be maintained for at least one audit cycle for follow-up audits. • Follow the required Quality Record Procedure requirements. 62
Pitfalls to Avoid • Inadequate planning/preparation • Inadequate communication prior to audit • Lack of clearly defined scope • Inadequate knowledge of standards • Improperly trained auditors • Failure to reevaluate implemented corrective actions 63
Chapter 6 Establishing the Framework for an Audit Program 64
Establishing the Framework for an Audit Program • Top management gives authority to establish audit function – Policy Q17-01 – Procedure P17-01 • Audit administrator is assigned – Management Representative • Purpose and scope established – Minimum compliance purposes – Continuous quality purpose 65
General Principles to Administering an Audit • Objectivity – Independence – Attack problem, not people – Avoid conflict – Verify data • Confidentiality – Information should not be shared by auditor from company to company 66
Audit Staff • Auditors are selected on the basis of: – Experience – Knowledge – Communication skills – Personal traits – Judgement 67
Audit Records Retention • Permanent records – Notification letter – Audit plan – Pre-assessment questionnaire – On-site audit/evaluation – Working papers – Audit report letter – Closure letter – Auditor training/qualification • Nonpermanent records – Notes, supporting documents • Audit records kept 3 years 68
Chapter 7 The First Seven Elements of a Quality Management System 69
The First Seven Elements of a Quality Management System 1. Management responsibility 2. Quality system 3. Contract review 4. Design control 5. Document control 6. Purchasing 7. Customer-supplied product 70
1--Management Responsibility [checklist] • Management Responsibility • Quality policy • Planning • Responsibility, authority & communication • Management review • Resource management • Infrastructure • Work environment • Customer satisfaction • Improvement 71
2--Quality System [checklist] • General requirements • Documentation requirements • Quality Manual • Quality management system planning I quality manual II procedures III work instructions IV Forms, tags, labels 72
3--Contract Review [checklist] • Customer focus – Interested parties • Customer-related processes – Determine mutually acceptable processes • Review of requirements related to the product • Customer communication – Product information – Amendments – Customer complaints/feedback 73
4--Design Control [checklist] • Design and development – Planning – Inputs – Outputs – Review – Verification – Validation • Control of design and development changes 74
5--Document & Data Control [checklist] • Control of documents – Approval – Review and update – Current revision status – Latest versions at points of use – Documents remain legible and retrievable – External documents are controlled – Obsolete documents are identified 75
6--Purchasing [checklist] • Purchasing – Purchasing process – Purchasing information – Verification of purchased product 76
7--Control of Customer Supplied Product [checklist] • Customer property – Ingredients or components – Packaging materials – Customer material in storage – Transport to a third party – Customer intellectual property 77
Chapter 8 The Second Seven Elements of a Quality Management System 78
The Second Seven Elements of a Quality Management System 8. Product identification and traceability 9. Process control 10. Inspection and testing 11. Inspection, measuring, and test equipment 12. Inspection and test status 13. Control of nonconforming product 14. Corrective & preventive action 79
8--Product Identification and Traceability [checklist] • Identification and traceability – Drawings – Documents – Bar codes – Computer – Tagging – Labeling – Handling/storage • Segregation/quality status • Quantities • Records of traceability • Shipment records 80
9--Process Control [checklist] • Product realization – Planning of product realization • Production and service provision – Control of production and service provision – Does not include servicing – Validation of special processes • Monitoring and measurement of processes – Reaction time – Yield 81
10--Inspection and Testing [checklist] • Monitoring and measurement of product [from receiving inspection to product delivery] – Receiving inspection and testing • Lot sampling plans • Skip lot • Certifications – In-process inspection and testing • First piece setup • Process audits – Final inspection and test • 100% inspection • Lot sampling • Product audits 82
11--Inspection, Measuring, and Test Equipment [checklist] • Control of measuring and monitoring devices – Calibration procedures – Calibrated at defined intervals – Identified and safeguarded – Protected from damage – Personnel trained – Maintain records – Control environment – Confirm computer software 83
12--Inspection and Test Status [checklist] • Identification and traceability – Status of material maintained throughout process • Paper records • Computer records • Product tags • Bar codes • Traceability of product with releases – Identification of responsible personnel for conformance decisions • Records of product release 84
13--Control of Nonconforming Product [checklist] • Identification [NCMR] – Marking, tagging, computer • Segregation – Physical, records, computer • Disposition – Evaluation by authorized personnel • Accept with repair by concession • Accept without repair by concession • Rework to specifications • Return to supplier [vendor] • Regraded for alternate application • Scrap 85
14--Corrective and Preventive action [checklist] • Identification of problem – Causes • Common or special • Repeat or isolated • Root cause determination • Evaluation of impact – Costs – Performance – Safety – Customer satisfaction • Implementation of corrective actions [prevent recurrence] • Implementation of preventive actions [prevent occurrence] 86
Chapter 9 The Final Seven Elements of a Quality Management System 87
The Final Seven Elements of a Quality Management System 15. Handling, storage, packaging, preservation, and delivery 16. Quality records 17. Internal quality audits 18. Training of personnel 19. Servicing 20. Statistical techniques 21. Quality cost analysis 88
15--Handling, Storage, Packaging, Preservation, and Delivery • Handling – Prevent damage/deterioration – Maintain identification • Storage – Maintain identification/traceability • Packaging – Prevent damage/maintain identification • Preservation – Protect from deterioration • Delivery – Protection of quality after inspection • Feedback system 89
16--Control of Quality Records • Examples of quality records: – Management review – Employee education, skills, training, and experience – Production criteria – Design records – Supplier evaluations and actions – Special process validations – Customer property damage – Calibration and verification – Internal audits – Authorizing release of product – Nonconforming product – Corrective/preventive action 90
17--Internal Quality Audits • Scheduling – Frequency, dates, time involved • Objective – Type of audits • Scope – Location, element, audit team • Procedures – Training program, checklists • Implementation – On-site evaluation • Reporting – Corrective actions • Follow-up 91
18--Training of Personnel • Training needs planned/identified – Certifications for specific employees • Training is provided – Competency based on qualifications • Employee training is verified – Qualification/certification on the basis of; • Education, training, experience, and evaluation of skills verified • Human factors are considered – Inspire continuous improvement – Be knowledgeable about quality – Provide a good work environment 92
19--Servicing • Field servicing of products or services to meet requirements – Performed to written procedures • [P19-01] • Liability – Warranty • Claims/traceability – Ability to recall • Records, designs, specifications, process controls, testing results • Safety – Risks • [MSDS] 93
20--Statistical and Analytical Techniques • Process control techniques – Flowcharts – Control charts – Trend charts – Histograms – Pareto charts – Cause/effect diagram – Inspection plans • Assessment tools for applications – Benchmarking – FMEA – Reliability predictions 94
21--Quality Cost Analysis • Standard cost system – Standard cost vs actual cost • Cost of nonconformance – Value lost to company • Quality cost system – Prevention--Blue $ • QIP process – Appraisal--Blue $ • Inspection, calibration, testing – Internal failure--Red $ • Scrap, rework – External failure--Red $ • Returns, warranty claims 95
Chapter 10 Statistical Process Control 96 UCL LCL X
Key Process and Product Variables • Process map [flowchart] – Identification of: • Quality control points • Location of activities • Who is responsible for activities – Comparison to external and internal customer requirements [quality plan] – Process and inspection data feedback to control system Start or end Go/no go Task 97
Variability of Processes and Products • Causes of variability in processes – Man, machine, material, methods, mother nature • Evaluation of the causes of variability – Special causes – Common causes Process MethodMaterial MachineMan Mother Nature 98
Statistical Control charts and Process Stability • Statistical limits [based on past data] – Minimum 20 samples • Statistical control – Common cause variation • Data points outside limits – Out of control • Data points exhibiting patterns – Runs, trends, 7 consecutive • Determination of special causes or process changes – Notes 99
Types of Data Collection • Variables Control Charts – Measurement • X-bar, R control chart – Samples are averaged, range plotted • Individual, moving range [Xmr] – One unit measured, range plotted • Attributes Control Charts – Count • Nonconforming products – P charts – NP charts • Nonconformities per unit – C charts – U charts 100
Signals vs Noise • Out of control signals or patterns – Data points beyond the control limits – Data points in a run [7 or more points above or below central line] – Data points in a trend [7 or more points going up or down and crossing the central line] – Data points in a periodic configuration – Data points stratified 101
Chapter 11 Statistical Sampling for Auditing 102
Aspects of Sampling • Sampling obtains information from a part of the total population or field • Sampling is used in: – Accounting – Business – Industry – Quality auditing 102
Methods Used Must Suit Needs of the Audit • Types of approaches – Estimation sampling • Provides the auditor with an estimate of the frequency of occurrences of an event in the field and considers sampling error • Desired sample precision is based on risk and consequences of making an error – Inventory accuracy vs airplane engine defects – Discovery sampling • It is used to find one nonconformance within a given field size – Acceptance sampling • Is based on a continuous process and is not suggested for use in quality audits 103
Sample Selection • Establish what is to be sampled depending on the scope of the audit – Critical work instructions – Highly stressed, high-volume, high precision areas – Contributory factors that make the process successful – Time allocated 104
How to Select an Unbiased Sample • Equal chance of selection • After process is running consistently • Selection of predetermined number of random samples – Use of random number tables – Use of calculator – Use of a book 105 Deck of cards to show biased sample

More Related Content

PPT
Internal Process Audit
byintellisenseit
 
PPTX
Internal Audit
byAhmad Tariq Bhatti
 
PDF
Evolving role of internal auditing function
byDebashis Gupta
 
PDF
Internal audit ppt
byLetzconsult.com
 
PPTX
Internal and external audit
bySundar B N
 
PPTX
Sarbanes-Oxley act
byRizze
 
PPT
Legal Audit Power Point
bydja2law
 
PPT
2. engagement letter
bySyed Osama Rizvi
 
Internal Process Audit
byintellisenseit
 
Internal Audit
byAhmad Tariq Bhatti
 
Evolving role of internal auditing function
byDebashis Gupta
 
Internal audit ppt
byLetzconsult.com
 
Internal and external audit
bySundar B N
 
Sarbanes-Oxley act
byRizze
 
Legal Audit Power Point
bydja2law
 
2. engagement letter
bySyed Osama Rizvi
 

What's hot

PPTX
The role of internal audit department
bySalih Islam
 
PPTX
Standards of Internal Audit
byKaran Puri
 
PPTX
Internal audit ppt
byIbrahim Jimalle
 
PPT
Internal audit
byShoab Malek (Certified Quality Auditor)
 
PPTX
Common internal audit findings & how to avoid them
bySurajit Datta
 
PDF
Clinical evaluation: Supporting medical device product life-cycle. Applicable...
byArete-Zoe, LLC
 
PPTX
Basic Internal Auditing Presentation
byVernon Benjamin
 
PPT
Financial Statements Audit
bySalih Islam
 
PPTX
The Role of Internal Audit
byArmeniaFED
 
PPTX
Internal audit
byRahul Mithia
 
PPTX
Presentation on Audit Findings
byDeshapriya Senanayake
 
PPT
Corporate Compliance Management
byPavan Kumar Vijay
 
PPTX
Audit Process, Audit Procedures, Audit Planning, Auditing
byAdvance Business Consulting
 
PDF
Business Compliance Basics
byCT
 
PPT
Compliance audit
byEmma Yaks
 
PDF
Audit report- SA 700. 705, 706
byPiyali Parashari
 
PPTX
Types of audit
byPooja Soni
 
PPT
Financial audit
byEMAC Consulting Group
 
DOCX
Role of internal audit
byMyron Duncan Burton Betshanger
 
PPTX
Auditing
byAnita Tongli
 
The role of internal audit department
bySalih Islam
 
Standards of Internal Audit
byKaran Puri
 
Internal audit ppt
byIbrahim Jimalle
 
Internal audit
byShoab Malek (Certified Quality Auditor)
 
Common internal audit findings & how to avoid them
bySurajit Datta
 
Clinical evaluation: Supporting medical device product life-cycle. Applicable...
byArete-Zoe, LLC
 
Basic Internal Auditing Presentation
byVernon Benjamin
 
Financial Statements Audit
bySalih Islam
 
The Role of Internal Audit
byArmeniaFED
 
Internal audit
byRahul Mithia
 
Presentation on Audit Findings
byDeshapriya Senanayake
 
Corporate Compliance Management
byPavan Kumar Vijay
 
Audit Process, Audit Procedures, Audit Planning, Auditing
byAdvance Business Consulting
 
Business Compliance Basics
byCT
 
Compliance audit
byEmma Yaks
 
Audit report- SA 700. 705, 706
byPiyali Parashari
 
Types of audit
byPooja Soni
 
Financial audit
byEMAC Consulting Group
 
Role of internal audit
byMyron Duncan Burton Betshanger
 
Auditing
byAnita Tongli
 

Viewers also liked

PPT
Quality Assurance
byHenmaidi Alfian
 
PPTX
Quality Manual
byFirasMfarrej
 
PPT
Product Quality Review (PQR)
byRikul Patel
 
PPT
Product quality review
byGMP EDUCATION : Not for Profit Organization
 
PPT
Aaps Quality Agreement Presentation Share
byRalphDillon
 
PPT
Quality Assurance and Improvement Standards for OVC Services in Ethiopia
byremoved_62798267384a091db5c693ad7f1cc5ac
 
PPTX
Audit and technology
bysandesh mundra
 
PDF
Types of pipes
byKaustuv Ruhela
 
PDF
Seven Phases Standard Product Life Cyle
bySilicon Valley ProductCamp
 
PDF
Analytical Quality Agreement Template
byphillipsm4
 
PPTX
QUALITY CONTROL
byguest5f88cca78
 
PPTX
Hardware fittings
byvijay2526
 
PPTX
Audit & Compliance Presentation
byJo Heighway
 
PPT
Iso 9000 Presentation
byjeff_tuthill
 
PPTX
Pipes, fittings-fixtures and appliance
byHarsha Singh
 
PPTX
Alcoholic Beverages
byFSNutri
 
PPT
ISCIR - National Authority for Control and Approval of Boilers Pressure Vesse...
byIMI PQ NET Romania
 
PDF
The impact of information technology on external audit fees a field study i...
byAlexander Decker
 
PDF
Our Product catalogue2 - Standard & Partners Ltd
byEmesure Mark
 
KEY
Standard product
byRock Cottage Glassworks
 
Quality Assurance
byHenmaidi Alfian
 
Quality Manual
byFirasMfarrej
 
Product Quality Review (PQR)
byRikul Patel
 
Product quality review
byGMP EDUCATION : Not for Profit Organization
 
Aaps Quality Agreement Presentation Share
byRalphDillon
 
Quality Assurance and Improvement Standards for OVC Services in Ethiopia
byremoved_62798267384a091db5c693ad7f1cc5ac
 
Audit and technology
bysandesh mundra
 
Types of pipes
byKaustuv Ruhela
 
Seven Phases Standard Product Life Cyle
bySilicon Valley ProductCamp
 
Analytical Quality Agreement Template
byphillipsm4
 
QUALITY CONTROL
byguest5f88cca78
 
Hardware fittings
byvijay2526
 
Audit & Compliance Presentation
byJo Heighway
 
Iso 9000 Presentation
byjeff_tuthill
 
Pipes, fittings-fixtures and appliance
byHarsha Singh
 
Alcoholic Beverages
byFSNutri
 
ISCIR - National Authority for Control and Approval of Boilers Pressure Vesse...
byIMI PQ NET Romania
 
The impact of information technology on external audit fees a field study i...
byAlexander Decker
 
Our Product catalogue2 - Standard & Partners Ltd
byEmesure Mark
 
Standard product
byRock Cottage Glassworks
 

Similar to Fundamentals of Auditing PTC

PPTX
Audit Technique
byMonzure Mahbub
 
PPTX
ISO 9001 Internal Auditor PPT.pptx Quality management system
byDrMahendran Rajendran
 
PPTX
Tqm quality audit
bypremsruthi
 
PPTX
Auditing in QA and Engineering department.pptx
byNishiLadhawala
 
PPTX
Internal_Audit_Presentation.pptx
bykamallochanpalei
 
PDF
Auditing Principles
byRASHID MAHMOOD
 
PPTX
Auditing in pharmacutical industries
byPriyanka Kandhare
 
PPTX
Iso 9001:2015 internal auditor Course
byAtif Alhaj
 
PPTX
Tqm
byKUN CAPITAL, ASHOK LEYLAND AS A INTERN
 
PPT
Iqa training -manufacturing[1]
byJitesh Gaurav
 
PPT
Internal auditors training programme
byVIBHASH SINGH
 
PPT
Quality Audit
byHafsa Munir
 
PPTX
Internal Quality Auditing for a Management System
byshahzaibhuss2000
 
PPTX
735994164735994164-Internal-Audit-Presentation.pptx
byIsmail Sultan
 
PPSX
QMS Audit Process June 2015
byEngineer Imtiaz Rehman
 
PPTX
Internal Audits ((Self Inspection)).pptx
byMohamed Abu Rahal
 
PPTX
Internal audit of ISO 9001 Quality management system.pptx
byElsadigAmncons
 
PPTX
Quality audits
byIzhar Ahmed Mansuri
 
PPT
Cairo Audit
byahmad bassiouny
 
PPTX
Core Knowledge about QMS
byMUHAMMAD ASIM (LA)
 
Audit Technique
byMonzure Mahbub
 
ISO 9001 Internal Auditor PPT.pptx Quality management system
byDrMahendran Rajendran
 
Tqm quality audit
bypremsruthi
 
Auditing in QA and Engineering department.pptx
byNishiLadhawala
 
Internal_Audit_Presentation.pptx
bykamallochanpalei
 
Auditing Principles
byRASHID MAHMOOD
 
Auditing in pharmacutical industries
byPriyanka Kandhare
 
Iso 9001:2015 internal auditor Course
byAtif Alhaj
 
Tqm
byKUN CAPITAL, ASHOK LEYLAND AS A INTERN
 
Iqa training -manufacturing[1]
byJitesh Gaurav
 
Internal auditors training programme
byVIBHASH SINGH
 
Quality Audit
byHafsa Munir
 
Internal Quality Auditing for a Management System
byshahzaibhuss2000
 
735994164735994164-Internal-Audit-Presentation.pptx
byIsmail Sultan
 
QMS Audit Process June 2015
byEngineer Imtiaz Rehman
 
Internal Audits ((Self Inspection)).pptx
byMohamed Abu Rahal
 
Internal audit of ISO 9001 Quality management system.pptx
byElsadigAmncons
 
Quality audits
byIzhar Ahmed Mansuri
 
Cairo Audit
byahmad bassiouny
 
Core Knowledge about QMS
byMUHAMMAD ASIM (LA)
 

Fundamentals of Auditing PTC

  • 1.
    FUNDAMENTALS OF AUDITING Carroll Sams Reference: FUNDAMENTALSof QUALITY AUDITING By B. Scott Parsowith
  • 2.
    Contents Chapter 1 Overviewof Quality Auditing 1 Chapter 2 Audit Definitions and Applications 9 Chapter 3 Phase 1--Audit Initiation and Preparation 26 Chapter 4 Phase 2--Performance of an Audit: On-Site Evaluation 40 Chapter 5 Phases 3 & 4--Reporting and Closure Phases 55 Chapter 6 Establishing the Framework for an Audit Program 64 Chapter 7 The First Seven Elements of a Quality System 69 Chapter 8 The Second Seven Elements of a Quality System 78 Chapter 9 The Final Seven Elements of a Quality System 87 Chapter 10 Statistical Process Control 96 Chapter 11 Statistical Sampling for Auditing 102
  • 3.
    Chapter 1 Overview ofQuality Auditing 1
  • 4.
    Audit Overview • Auditingis an art and a science. • Audits are snapshots in time. • Audits should not be confrontations. • Auditors investigate, verify, and confirm. • The audit should be used as a tool for continual improvement of the quality management system. 2
  • 5.
    Auditor Knowledge • Qualitymanagement system requirements • Product specifications • Process procedures • Investigation techniques • Sampling techniques • Communication techniques 3
  • 6.
    Auditor Traits • Observant •Honest • Investigative • Questioning • Through • Communicative • Adaptable • Cooperative • Polite • Professional • Persistent 4
  • 7.
    Two Types ofQuality Standards • System standards – Examples • ANSI/ISO/ASQ Q9000 standards • QS-9000 automotive standards • ISO 14000 environmental standards • Product standards (specifications) – Examples • Chemical and physical property requirements • Dimensional tolerances 5
  • 8.
    Review and Verify Documentation, Implementation,and Effectiveness of • Policy manuals • Procedure manuals • Work instructions, drawings, etc. • General quality management system requirements • Individual product specifications 6
  • 9.
    Audits Can • Enhanceinternal quality management systems • Be part of continual quality improvement efforts • Help establish trusting relationships internally and externally • Find problems before someone else does! 7
  • 10.
    Audits Are Not •Acceptance of product • Punch lists • Public hangings • Fault Finding • Ill-prepared • Antagonistic • Biased • Rambling 8
  • 11.
    Chapter 2 Audit Definitionsand Applications 9
  • 12.
    What Is anAudit? • ANSI/ISO/ASQC Q10011-1- 1994: “A systematic and independent examination to determine whether quality activities and related results comply with planned arrangements and whether these arrangements are implemented effectively and are suitable to achieve objectives.” • Quality Applications: – System audit – Process audit – Product audit 10 I II III
  • 13.
    Institute of Internal Auditors •Definition from IIA – “Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes.” 11
  • 14.
    Additional Audit Terms •Compliance audit – Compliance to standards – Review of processes – Review of data • Operational audit – Time studies – Work studies • Readiness review by internal management – ANSI/ISO/ASQ Q9000 system • Management review – Processes, procedures, & controls • Survey – Comprehensive evaluation 12
  • 15.
    System Audit Definition “A documented activity performed to verify, by examination and evaluation of objective evidence, that applicable elements of the quality management system are appropriate and have been developed, documented, and effectively implemented in accordance and in conjunction with specified requirements.” 13
  • 16.
    Types of Audits •Internal audits – First-party audits • Management system audits • Self-assessments • External audits – Second-party audits • Sister company audits • Supplier audits – Third-party [extrinsic] audits • ABS Registrar audits • OSHA Safety audits • KPMG Accounting audits 14
  • 17.
    Types of Audits (continued) •Survey – Comprehensive evaluation of facilities, resources, economic stability, personnel, capability • System audits – Verification that a quality management system exists and is being followed • Process audits – Verifies procedures exist, correct, & are being followed under standard, rushed/adverse conditions • Product audits – Verifies inspector capabilities and correct use of specifications 15
  • 18.
    Hierarchy of Audits Survey Systemaudit Process audit Product audit 16
  • 19.
    Characteristics of Audits •Are independent of doer – Performed by a person not responsible for production or services in area being audited • Have measurement criteria – Specifications (quality management system and product requirements) – Attribute data (good/bad) – Variables data (actual measurements) 17
  • 20.
    Characteristics of Audits (continued) •Are performed by competent personnel – Trained audit team members • Are cost effective – Prevention of problems • Are samples of the system – Isolate one small moment in time. – Represent the total population • Must be sure the sampling procedure is correct. – Avoid making incorrect assumptions 18
  • 21.
    Two Types ofSample Process Errors • Type I error (alpha error) – We assume something is unacceptable when it is actually acceptable • Producer’s Risk • Type II error (beta error) – We assume something is acceptable when it is actually unacceptable • Consumer’s Risk • Sample consideration – Size, amount, location, & errors 19
  • 22.
    Use of Audits •Continual improvement efforts – Internal and external • Benchmarking • Value-added suppliers • Certification – Internal (quality management system) – External (suppliers) Note: Do not use audits alone to determine acceptance of product. 20
  • 23.
    Why Audit? • Competition –External--We want low-cost, high- value suppliers – Internal--We want to verify our systems are adequate/effective • Regulation – Imposed by customers – Self-imposed – General quality standards or internal quality standards • Self-preservation to audit ourselves before someone else does – OSHA 21
  • 24.
    Audits Improve Performance ifThey • Meet management needs – Provide feedback on areas needing improvement • Provide a forward look in time – Can predict where process controls or product measurements are needed • Measure effectiveness and compliance to internal and external policy and contract requirements 22
  • 25.
    Who Is theCustomer? • There are three customers (clients) we must satisfy on each audit. – Auditee • Person being audited (internal or external) – Boss or manager • Give authority to perform internal audit – Buyer of the service (client) • Buyer of service on external audit 23
  • 26.
    What Managers Do •Responsible for entire system and its various processes • Continual process improvement – Plan – Do – Check (Study) • audits address the “check” function of the cycle by checking and monitoring a system – Act Plan DoCheck Act 24
  • 27.
    Audit Administration • Formalaudit procedures – Initiation and preparation 25% • Areas to be audited • Team composition and training • Notification of auditee • Checklist development • Transportation – On-site audit performance 50% – Reporting and closure 25% • Audit report • Audit records • Tracking and closure 25
  • 28.
    Chapter 3 Phase 1-- Audit Initiation and Preparation 26
  • 29.
    Audit Initiation Phase •Audit initiated by client – Develop audit plan • Lead auditor (audit manager) and client (approves) • Time allocated for audit – Client • Determine need for audit • The purpose of audit • The type of audit • The objectives of audit – Lead auditor • Scope of the audit 27
  • 30.
    The Preparation Phase •Items to be covered in the audit plan, which must be defined: – Objective [purpose, manuals, procedures, work instructions] – Scope [facility, product, process, system elements, departments] – Resources [trained auditors, technical expertise, team size] • Length of audit = < 500 employees: 1-3 days 500-1000 employees: 4-5 days – Initial contacts – Checklists – Past history 28
  • 31.
    Lead Auditor Responsibilities • Preparethe audit plan – 50% of work • Select the audit team – Based on plan • Brief the audit team – Safety issues – Brief auditee • Submit a report – 2 weeks maximum 29
  • 32.
    Desirable Auditor Characteristics • Knowledge –Quality, production, engineering & procurement – requirements – techniques • Open-mindedness • Patience • Interest • Tenacity • Professional attitude/integrity • Good listening skills 30
  • 33.
    Desirable Auditor Characteristics [continued] • Inquisitiveness •Good verbal/written skills • Analytical skills • Honesty • Ethics • Diplomacy • Good planning skills • Experience • Objectivity • Empathy 31
  • 34.
    Auditor Musts • Knowledgeof: – Verification techniques • Show me… • Objective evidence – Standards – Sampling techniques – Human nature • Four faces of Frank – Time management • You are in control 32
  • 35.
    Undesirable Auditor Characteristics • Argumentative •Opinionated • Lazy • Easily influenced • Inflexible • Impulsive--jump to conclusions • Gullible • Uncommunicative • Devious • Poor at planning • Unprofessional 33
  • 36.
    Contact the Auditee •Informal contact – Date – Purpose – Scope • Formal contact by letter/memo – Time and date of audit – Purpose – Scope – Activities to be audited – Interfacing organizations – Applicable quality requirements – Identification of team members – Preliminary schedule 34
  • 37.
    Perform Desk Audit •Review quality system documentation of auditee – Policy Manual/Procedures • Determine what control systems are in place – What facts are available? • What is the product? – Become familiar with product • Review prior audits • Investigate exemptions or waivers • Review performance history 35
  • 38.
    Develop Checklists that Provide: •Structure – Define before audit/use team • Required coverage – Not designed to stifle creativity. • A communication document – A prompt to your next question. • A place to record data – Objective evidence is required for anything less than satisfactory. • Help in time management – Pace of the audit 36
  • 39.
    Auditors--Points to Consider • Auditorscan use: – Canned checklists – Yes/no checklists [attributes] – Rating checklists [variables] • Things to consider when developing checklists: – What is process during normal operations? • Rushed conditions? • When there is a problem? 37
  • 40.
    Summary of the PreparationPhase • Define the audit objective • Establish the audit scope • Allocate resources • Contact the auditee • Develop checklists • Review history • Understand the process and control systems 38
  • 41.
    Results of the PreparationPhase • Audit plan – auditee, purpose, scope, activities to be audited, team, standards • Checklist questions • Items and reference location of each requirement • Initial evaluation – Based on documentation received • Desk audit • Past audit results • Plan for action – Areas needing attention/audited 39
  • 42.
    Chapter 4 Phase 2--Performanceof an Audit: On-Site Evaluation 40
  • 43.
    The Performance Phase •Hold opening meeting • Conduct on-site audit • Review controls of quality management system • Verify that the system is working – Is it documented, implemented, and effective? • Share information 41
  • 44.
    The Opening Meeting •Must have: – Entire audit team present – Auditee’s plant manager/staff • Requires two-way communication – Trade introductions – Restate objectives – Form initial impressions – State any areas of concern – Settle logistics; space, lunch, etc. • Should take no more than 30 minutes 42
  • 45.
    The Opening Meeting [continued] •If needed: – Allow 15 minute maximum for auditee to present quality management system enhancements • Distribute the checklist(s) • Define the audit schedule • Be on time 43
  • 46.
    On-Site Evaluation • Auditorscan be compared to florists: – Collects evidence [flowers] – Puts it on worksheets [baskets] – Arranges the data [flower arrangement] – Delivers the report [delivers flowers in baskets] 44
  • 47.
    Causes of QualityIssues • Lack of top management support • Lack of organization • Lack of training • Lack of discipline • Lack of resources • Lack of time • Lack of teamwork • Lack of knowledge • Lack of consistency – Look for symptoms of these issues 45
  • 48.
    Evaluating Information • Formal[documented] control systems vs. Informal [understood/verbal] control systems – Does top management believe in quality and are these beliefs communicated throughout the organization? – Is the control system used by management? – Is the control system adequate? • Are key variables identified? – Is the control system working? • How is it monitored? 46
  • 49.
    Verification Methods • Threeprimary methods used: – Tracing – Corroboration – Sampling [discussed in Chapter 11] A Contract Random Horizontal Vertical 47
  • 50.
    Tracing Techniques • Techniquesof tracing – Contract -- Series of audits performed on a contract as the contract progresses [2nd party] – Random -- Review what is taking place at time of audit [3rd party] – Horizontal • Backward -- From the end of process [1st, 2nd, 3rd party] • Forward -- From the beginning of process [1st, 2nd, 3rd party] • Middle -- Backward or forward from some critical point in process [1st, 2nd, 3rd party] 48
  • 51.
    Tracing Techniques [continued] • Vertical-- Reviews management layers for elements such as quality goals and quality communications • Departmental -- Reviews numerous quality elements within a department • Element -- Reviews a quality element in various departments 49
  • 52.
    Corroboration • A statementis not a fact until it is corroborated by someone else or is verified by a document. – The facts must agree: • Two different auditors • Two different records • Two different interviews – Combination of the above • Tie conclusions to what is tangible – Qualitative [some documents reviewed did not have…] – Quantitative [out of 50 documents reviewed, 5 were found to have…] • Forms, records, procedures 50
  • 53.
    Sources of DataCollection • Physical evidence – Reinspect, retest, recheck – Documentation and records • Sensory observations – Rusty parts – Nonconforming parts stored with good parts – Observation of tasks being performed • Comparisons and relationships – Patterns and trends • Interviews and questions – Valuable source of information – No place for sexism or biases 51
  • 54.
    Effective Interviews 1.Put personat ease. – Your presence is threatening. 2. Explain your purpose. – Demonstrate competence. 3. Use proper questioning techniques. – Ask open-ended questions. – Use “pregnant pause”. – Ask why five times/five w’s. 4. Analyze and verify what is said. – Verify a claim. – Write notes out loud/no secrets. 5. Explain your next step. – Conclude cordially. 52
  • 55.
    Brief the AuditeeDuring the Audit • Short and to the point – Discuss verifications and concerns – About 5-10 minutes – In each area as you progress through the facility 53
  • 56.
    Auditor Team Meetings •Informal – End of each day with audit team • Auditor sharing – Facts, conclusions, problems • Replanning – Changes to the audit schedule • Reporting – Preliminary audit results • Status of the audit or areas covered – Areas completed, areas to be examined, concerns & issues 54
  • 57.
    Chapter 5 Phases 3and 4--Reporting and Closure Phases 55
  • 58.
    Reporting Phase • Informalreport – Exit meeting--60 minutes • Formal report – Written & distributed within two weeks after the audit “Clear and precise reports” • Statements of noncompliance contain – Requirement – Location – Evidence – Finding(s) 56
  • 59.
    The Exit Meeting •Same people as opening meeting • Lead Auditor presents summary • Disclaimer about sampling • Lead auditor reads findings • Explain follow-up and corrective action response process. 57
  • 60.
    Findings • Observation – Writewhat you were doing. • “While auditing Purchasing I found drawings for new suppliers were not being marked on form…” • Attribution – Restate system’s deficiencies relating to the standard or written documentation of company. • “This is a finding against Procedure P01-01 which requires all new drawings sent to suppliers…” • Explanation – Explain why this is a finding • “The drawing must be recorded to ensure supplier has latest version.” 58
  • 61.
    Degree of Severityof Findings • The report should order findings by their importance. – Major finding--conflict with contractual or procedural requirements. [6 maximum] – Minor finding--Isolated observations in conflict with contractual or procedural requirements. [6 maximum] – Concerns--Observations that may not be part of the required quality management system, but are worthy of further consideration. 59
  • 62.
    Content of theFormal Audit Report • Formal audit report from audit team to client should include: – Purpose and scope of audit – Participant’s names – Background information – Summary of the results – Identified weaknesses in order of importance – Date and signature of lead auditor 60
  • 63.
    The Closure Phase •Auditee has 30-45 days to respond with plan of action. • Auditee’s corrective action evaluated. • Formally close corrected items. • Items requiring on-site verification are reaudited. • Letter of closure issued. • All documentation filed. 61
  • 64.
    Retention of Audit Documents •“Working papers” should be maintained for at least one audit cycle for follow-up audits. • Follow the required Quality Record Procedure requirements. 62
  • 65.
    Pitfalls to Avoid •Inadequate planning/preparation • Inadequate communication prior to audit • Lack of clearly defined scope • Inadequate knowledge of standards • Improperly trained auditors • Failure to reevaluate implemented corrective actions 63
  • 66.
    Chapter 6 Establishing the Frameworkfor an Audit Program 64
  • 67.
    Establishing the Framework foran Audit Program • Top management gives authority to establish audit function – Policy Q17-01 – Procedure P17-01 • Audit administrator is assigned – Management Representative • Purpose and scope established – Minimum compliance purposes – Continuous quality purpose 65
  • 68.
    General Principles to Administeringan Audit • Objectivity – Independence – Attack problem, not people – Avoid conflict – Verify data • Confidentiality – Information should not be shared by auditor from company to company 66
  • 69.
    Audit Staff • Auditorsare selected on the basis of: – Experience – Knowledge – Communication skills – Personal traits – Judgement 67
  • 70.
    Audit Records Retention •Permanent records – Notification letter – Audit plan – Pre-assessment questionnaire – On-site audit/evaluation – Working papers – Audit report letter – Closure letter – Auditor training/qualification • Nonpermanent records – Notes, supporting documents • Audit records kept 3 years 68
  • 71.
    Chapter 7 The FirstSeven Elements of a Quality Management System 69
  • 72.
    The First Seven Elementsof a Quality Management System 1. Management responsibility 2. Quality system 3. Contract review 4. Design control 5. Document control 6. Purchasing 7. Customer-supplied product 70
  • 73.
    1--Management Responsibility [checklist] • ManagementResponsibility • Quality policy • Planning • Responsibility, authority & communication • Management review • Resource management • Infrastructure • Work environment • Customer satisfaction • Improvement 71
  • 74.
    2--Quality System [checklist] • Generalrequirements • Documentation requirements • Quality Manual • Quality management system planning I quality manual II procedures III work instructions IV Forms, tags, labels 72
  • 75.
    3--Contract Review [checklist] • Customerfocus – Interested parties • Customer-related processes – Determine mutually acceptable processes • Review of requirements related to the product • Customer communication – Product information – Amendments – Customer complaints/feedback 73
  • 76.
    4--Design Control [checklist] • Designand development – Planning – Inputs – Outputs – Review – Verification – Validation • Control of design and development changes 74
  • 77.
    5--Document & Data Control[checklist] • Control of documents – Approval – Review and update – Current revision status – Latest versions at points of use – Documents remain legible and retrievable – External documents are controlled – Obsolete documents are identified 75
  • 78.
    6--Purchasing [checklist] • Purchasing –Purchasing process – Purchasing information – Verification of purchased product 76
  • 79.
    7--Control of Customer SuppliedProduct [checklist] • Customer property – Ingredients or components – Packaging materials – Customer material in storage – Transport to a third party – Customer intellectual property 77
  • 80.
    Chapter 8 The SecondSeven Elements of a Quality Management System 78
  • 81.
    The Second Seven Elementsof a Quality Management System 8. Product identification and traceability 9. Process control 10. Inspection and testing 11. Inspection, measuring, and test equipment 12. Inspection and test status 13. Control of nonconforming product 14. Corrective & preventive action 79
  • 82.
    8--Product Identification and Traceability [checklist] •Identification and traceability – Drawings – Documents – Bar codes – Computer – Tagging – Labeling – Handling/storage • Segregation/quality status • Quantities • Records of traceability • Shipment records 80
  • 83.
    9--Process Control [checklist] • Productrealization – Planning of product realization • Production and service provision – Control of production and service provision – Does not include servicing – Validation of special processes • Monitoring and measurement of processes – Reaction time – Yield 81
  • 84.
    10--Inspection and Testing [checklist] •Monitoring and measurement of product [from receiving inspection to product delivery] – Receiving inspection and testing • Lot sampling plans • Skip lot • Certifications – In-process inspection and testing • First piece setup • Process audits – Final inspection and test • 100% inspection • Lot sampling • Product audits 82
  • 85.
    11--Inspection, Measuring, and Test Equipment[checklist] • Control of measuring and monitoring devices – Calibration procedures – Calibrated at defined intervals – Identified and safeguarded – Protected from damage – Personnel trained – Maintain records – Control environment – Confirm computer software 83
  • 86.
    12--Inspection and Test Status[checklist] • Identification and traceability – Status of material maintained throughout process • Paper records • Computer records • Product tags • Bar codes • Traceability of product with releases – Identification of responsible personnel for conformance decisions • Records of product release 84
  • 87.
    13--Control of Nonconforming Product [checklist] •Identification [NCMR] – Marking, tagging, computer • Segregation – Physical, records, computer • Disposition – Evaluation by authorized personnel • Accept with repair by concession • Accept without repair by concession • Rework to specifications • Return to supplier [vendor] • Regraded for alternate application • Scrap 85
  • 88.
    14--Corrective and Preventive action [checklist] •Identification of problem – Causes • Common or special • Repeat or isolated • Root cause determination • Evaluation of impact – Costs – Performance – Safety – Customer satisfaction • Implementation of corrective actions [prevent recurrence] • Implementation of preventive actions [prevent occurrence] 86
  • 89.
    Chapter 9 The FinalSeven Elements of a Quality Management System 87
  • 90.
    The Final Seven Elementsof a Quality Management System 15. Handling, storage, packaging, preservation, and delivery 16. Quality records 17. Internal quality audits 18. Training of personnel 19. Servicing 20. Statistical techniques 21. Quality cost analysis 88
  • 91.
    15--Handling, Storage, Packaging, Preservation, andDelivery • Handling – Prevent damage/deterioration – Maintain identification • Storage – Maintain identification/traceability • Packaging – Prevent damage/maintain identification • Preservation – Protect from deterioration • Delivery – Protection of quality after inspection • Feedback system 89
  • 92.
    16--Control of Quality Records •Examples of quality records: – Management review – Employee education, skills, training, and experience – Production criteria – Design records – Supplier evaluations and actions – Special process validations – Customer property damage – Calibration and verification – Internal audits – Authorizing release of product – Nonconforming product – Corrective/preventive action 90
  • 93.
    17--Internal Quality Audits • Scheduling –Frequency, dates, time involved • Objective – Type of audits • Scope – Location, element, audit team • Procedures – Training program, checklists • Implementation – On-site evaluation • Reporting – Corrective actions • Follow-up 91
  • 94.
    18--Training of Personnel • Trainingneeds planned/identified – Certifications for specific employees • Training is provided – Competency based on qualifications • Employee training is verified – Qualification/certification on the basis of; • Education, training, experience, and evaluation of skills verified • Human factors are considered – Inspire continuous improvement – Be knowledgeable about quality – Provide a good work environment 92
  • 95.
    19--Servicing • Field servicingof products or services to meet requirements – Performed to written procedures • [P19-01] • Liability – Warranty • Claims/traceability – Ability to recall • Records, designs, specifications, process controls, testing results • Safety – Risks • [MSDS] 93
  • 96.
    20--Statistical and Analytical Techniques •Process control techniques – Flowcharts – Control charts – Trend charts – Histograms – Pareto charts – Cause/effect diagram – Inspection plans • Assessment tools for applications – Benchmarking – FMEA – Reliability predictions 94
  • 97.
    21--Quality Cost Analysis • Standardcost system – Standard cost vs actual cost • Cost of nonconformance – Value lost to company • Quality cost system – Prevention--Blue $ • QIP process – Appraisal--Blue $ • Inspection, calibration, testing – Internal failure--Red $ • Scrap, rework – External failure--Red $ • Returns, warranty claims 95
  • 98.
  • 99.
    Key Process andProduct Variables • Process map [flowchart] – Identification of: • Quality control points • Location of activities • Who is responsible for activities – Comparison to external and internal customer requirements [quality plan] – Process and inspection data feedback to control system Start or end Go/no go Task 97
  • 100.
    Variability of Processes andProducts • Causes of variability in processes – Man, machine, material, methods, mother nature • Evaluation of the causes of variability – Special causes – Common causes Process MethodMaterial MachineMan Mother Nature 98
  • 101.
    Statistical Control charts andProcess Stability • Statistical limits [based on past data] – Minimum 20 samples • Statistical control – Common cause variation • Data points outside limits – Out of control • Data points exhibiting patterns – Runs, trends, 7 consecutive • Determination of special causes or process changes – Notes 99
  • 102.
    Types of DataCollection • Variables Control Charts – Measurement • X-bar, R control chart – Samples are averaged, range plotted • Individual, moving range [Xmr] – One unit measured, range plotted • Attributes Control Charts – Count • Nonconforming products – P charts – NP charts • Nonconformities per unit – C charts – U charts 100
  • 103.
    Signals vs Noise •Out of control signals or patterns – Data points beyond the control limits – Data points in a run [7 or more points above or below central line] – Data points in a trend [7 or more points going up or down and crossing the central line] – Data points in a periodic configuration – Data points stratified 101
  • 104.
  • 105.
    Aspects of Sampling •Sampling obtains information from a part of the total population or field • Sampling is used in: – Accounting – Business – Industry – Quality auditing 102
  • 106.
    Methods Used MustSuit Needs of the Audit • Types of approaches – Estimation sampling • Provides the auditor with an estimate of the frequency of occurrences of an event in the field and considers sampling error • Desired sample precision is based on risk and consequences of making an error – Inventory accuracy vs airplane engine defects – Discovery sampling • It is used to find one nonconformance within a given field size – Acceptance sampling • Is based on a continuous process and is not suggested for use in quality audits 103
  • 107.
    Sample Selection • Establishwhat is to be sampled depending on the scope of the audit – Critical work instructions – Highly stressed, high-volume, high precision areas – Contributory factors that make the process successful – Time allocated 104
  • 108.
    How to Selectan Unbiased Sample • Equal chance of selection • After process is running consistently • Selection of predetermined number of random samples – Use of random number tables – Use of calculator – Use of a book 105 Deck of cards to show biased sample