Auditing Concept And Auditor
and Auditee's Attitude
Compliance and Audit
Compliance is an affirmative indication or judgment that the supplier
of product or service has met the requirements of the relevant specifications,
contract, or regulation, also meeting the requirements. On the other hand, in
ISO terms, ‘Compliance to regulations, compare with conformance’. So,
enterprises/facilities/industries of all sizes can ensure supplier, operational
and regulatory compliance to down risk, increase opportunity and realize the
full potential of agreements, transactions and contracts. Three criteria are
essential in compliance: -
@ Effective Corporate Controls
@ Transparent Processes
and Efficient Audits
@ Timely Disclosures
An
audit is a systematic and independent examination to determine whether Standard
compliance activities and related results comply with planned arrangements and
whether these arrangements are implemented effectively and are suitable to
achieve objectives.
The above definition has some important
characteristics of an audits. The following characteristics will be built into
a social compliance/COC audits to maximize audit credibility and effectively:
1. Planned: Audits must be
planned in accordance to a defined objective. To be effective, auditors should
prepare for an audit by considering questions such as:
Ø What is the purpose of this audit?
-Define
what needs to be accomplished.
Ø What is the scope of
this audit?
-Define
what/who will be audited
Ø Who will perform the
audit?
-Define which person(s) will carry out
activities
Ø When will the audit be
performed?
-Define
the day(s) and time(s) for the audit
Ø What information
sources will be utilized? -Define
a strategy for investigation by identifying
Ø what information is
available/appropriate for review.
2. Independent: Audits
must be performed by persons who are independent of the functions audited in
order to eliminate potential bias.
3. Management
Co-operation: The success of any audit program depends on the support of
management
4.Compliance
Orientation: Social compliance/COC audits is to a specific standards
are conducted which the auditors look for compliance to
the requirements set forth by the standards. This means that Social
compliance/COC audits will review documentation for intent to
comply with the applicable standard, as well as records and processes to
determine implementation of the document system and how effective the
Social compliance/COC is working at the facility.
Necessity of Audit
@ Identification of
opportunities for improvement.
@ Implementation status
check.
@ Effectiveness check.
@ Improve communications
and motivation.
@ To check level of
standard with any brands,ILO,SA8000,WRAP etc
@ To ensure customer
requirements
@ To ensure local labour
law at the workplace
@ Enhance management and
workers communication
@ and to enhance profit through productivity
increase
Factory Management’s
Role in Audit
Management
has an active role in both an internal & external audit program, and is
charged with the responsibility of:
•
Initiation of the audit program: The audit program must
be initiated and supported by management .
•
Assurance of auditor independence: Provisions must be made
to ensure that auditors have no responsibilities in the areas audited so as to
eliminate the possibility of any bias with respect to audit findings.
•
Provide resources: Managers must ensure that there are an adequate
number of available auditees to administer the audit program,with available
documents and that employees are made available during audits.
•
Assure corrective action: Managers must consider
and take actions necessary when the results of an audit show that corrective
action is required.
Concept
of Social Compliance /CoC Audit
A
social compliance /COC audit is a systematic and independent external
assessment administered by a trained social/COC auditor or certified Lead
Auditor of SA 8000/WRAP/ISO against a specific standard (for example
SA8000,BSCI and WRAP) etc. to determine whether an entity is meeting those
standards and complying with established policies, operating procedures and
national and local laws, ILO Conventions and international best practices .
So,
in any Social Compliance/COC audit five criteria are essential. These are as
follows-
[
F A
proper system ( ISO 9001:2000/8)
F An independent external assessment ( any 3rd
party or individual)
F Trained social/COC auditor or certified SA
8000/WRAP/ISO Lead Auditor
F Specific Standard (any brands COC, SA
8000/WRAP/FLA)
F and a Facility
Role of a Social
Compliance/COC Auditor
•
An assurance of engagement
•
Reliability of the information contained in the report
•
Perform only customer requirements not other tasks e.g. CSR
•
Gather evidence for all significant assertions in the report
•
Assess the report’s conformance to particular standards
•
Know the specific references –
-Labour Code’2006
-The Factories Act 1965
-The Factories Rules 1979
-Industrial Relations 1969
-The Environmental Act 1995
- The Environmental Rules
1997
-Bangladesh National Building
Code 2006
-Maternity Benefit Act 1953
&1959
-BEPZA Instruction
-ILO
- International Standard like-WRAP,SA 8000, ISO,OHSAS18001
-International Codes of
Conduct like-BSCI,FLA,ETI
-Brand Buyers Code of Conduct
Types of Audit
1.
1st Party Audit: This is the technical term used when conformity audit/assessment
to a standard, specification or regulation is carried out by the supplier
organization itself. In other words, it is a self-audit/assessment. In a word
it is called “In house-internal”
2.
2nd Party Audit: This indicates that the conformity audit/assessment is carried out
by a customer of the supplier organization. An audit driven by a customer with
the primary goal of satisfying itself that a supplier is in compliance with a.
“Out house-customer”
3.
3rd Party Audit: The conformity audit/assessment is performed by a body that is
independent of both supplier and customer organization. An external audit that
is conducted by an independent organization upon another organization. Powerhouse-registrar/certification
4.
Internal and External
Audit: Internal audits are
audits that are carried out by an organization on itself to confirm to
management that the compliance implementation system is in good working order. external
audits: 2nd party and 3rd party
Close
System Audit
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Open System
Audit
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Types of
Audit
Quality System Audit: A quality system audit is an evaluation of the whole quality
system, and will include all processes that affect quality.
6. Other Types of Audits:
•
Product Audits-A product audit is performed for the purpose of verifying that the
product meets the required specifications.
•
Process Audits-A process audit is performed for the purpose of verifying that the
process enables a product (that meets specified requirements) to be produced
consistently.
•
Problem or Spot
Audits-A problem (or “spot”)
audit is performed for the purpose of verifying continued stability in an area
where a problem has been identified.
•
Self Audits-A self-audit is performed when a manager audits his/her own area,
or when an employee audits his/her own work processes. This particular type of
audit lacks independence (is considered biased), but is considered
useful in the identification of (1) problems that may be found in documented
processes or (2) areas that could be improved.
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Terminology
of Audit
o
Assessment An estimate or determination of the significance, importance, or
value of something.
o
Audit A planned, independent assessment to determine whether agreed-upon
requirements are being met.
o
Auditee An organization being audited.
o
Auditor A person qualified to
perform social/COC/quality audits.
o
Certified Auditor A person who is certified by an accreditation body
o
Certification Procedure by which a third party gives written assurance that a
product, process or service conforms to specified requirements.
o
Client A person or organization requesting the audit.
o
Compliance An affirmative indication or judgment that the supplier of a
product or service has met the requirements of the relevant specifications,
contract or regulation; also, the state of meeting the requirements.
o
Conformity The fulfillment of specified requirements.
o
Corrective Action An action taken to eliminate the causes of an existing
nonconformity, defect or other undesirable situations in order to prevent
recurrence.
o
Finding A conclusion of importance based on observation(s).
o
Follow-up An audit whose purpose and scope are limited to verifying that
corrective action has been accomplished as scheduled and to determination that
the action effectively prevented recurrence.
o
Inspection Activities such as measuring, examining, testing, or gauging one or
more characteristics of a product or service and comparing these with specified
requirements to determine conformity.
o
Lead Auditor An auditor designated to manage a Social Compliance/quality audit.
o
Audit man days a unit of one day's normal work hours work by one person
o
Nonconformity The non-fulfillment of specified requirements.
o
Objective Evidence Information, which can be proved true, based on facts obtained
through observation, measurement, test, or other means.
o
Observation A statement of fact made during a social/COC/quality audit and
substantiated by objective evidence.
o
Preventive Action An action taken to eliminate the causes of a potential
nonconformity, defect,or other undesirable situation in order to prevent
occurrence.
o
Procedure A specified way to perform an activity.
o
Process A set of interrelated resources and activities which transform
inputs to outputs. Quality Audit 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.
o
Quality The continuing monitoring and verification of the status of
procedures,
o
Quality System The organizational structure, responsibilities, procedures,
processes and resources for implementing quality management.
o
Quality System A formal evaluation by top management of the status and adequacy of
the
o
Review quality system in relation to the company’s quality policy and new
objectives resulting from changing circumstances.
o
Record A document, which furnishes objective evidence of activities
performed and results obtained.
o
Subcontractor The organization that provides a product to a supplier.
o
Supplier An organization that provides a product or service to a customer.
o
Total Quality A systems approach to continuous improvement, centered on quality,
based
o
Management employee empowerment, and aiming at long-term success through
customer satisfaction and benefits to the organization and society.
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