Desk Reference Guide For the Auditing (CQA) Fundamentals ...

1 Auditing (CQA) Fundamentals II 2005 JP Russell & Assoc. Page 1 of 54 Desk Reference Guide For the Auditing (CQA) Fundamentals II E-Learning class at Content Provider: JP Russell Instructional Design By: Russell Web Design: Tracy Ryder E-Learning Provider: QualityWBT Center for Education Important Note: The Desk Reference Guide is a facsimile of the on-line class material. It may include some images but does not include: marking key phrases, direct links to glossary, interactive exercises, quizzes, graded tests with feedback, animations, hyperlinks to handouts, and EG Bag examples. Table of Contents Auditing Fundamentals .. 2 Auditor Competencies .. 15 Audit Program and Business Applications .. 30 Auditing (CQA) Fundamentals II 2005 JP Russell & Assoc. Page 2 of 54 Lesson 1: Auditing Fundamentals [This lesson is medium length, discusses words used in Auditing and the purpose of audits.]

2 ] The following is a discussion of the important terms and their meanings. Please supplement your understanding by using the glossary. Basic Terms and Concepts{PART OF THE CQA BOK} [CQA 2004 BOK Description: Define and differentiate basic quality- and audit-related terms, such as quality, quality assurance, quality control, evidence, finding, observation, noncompliance, and nonconformance.] The following is a discussion of the important terms and their meanings. Please supplement your understanding by using the glossary. 1. General Discussion: Quality: For something to contain or be quality, it must be measurable. Some dictionaries define quality as "general goodness". We cannot measure general goodness and therefore don t know if quality is achieved or not. Things like requirements, expectations, reliability, and performance are all measurable and can be quality. Quality Control - Quality Assurance - Quality Management : You can think of these as different levels, just like there are different levels of documents (such as specifications, detailed instructions, and procedures).

3 Quality control is the item-by-item inspection compared to predetermined requirements. Quality Assurance includes inspection as well as other activities, such as Auditing , to provide confidence that quality will be achieved. Quality Management--also called a Quality Management System--provides the overall guidance that may call for the reduction of inspection and control activities and more reliance on supplier partnerships. Observation: An observation is not classified as bad or good. As part of an audit or investigation, auditors make observations that may be used as evidence to show Auditing (CQA) Fundamentals II 2005 JP Russell & Assoc. Page 3 of 54 conformance or nonconformance to the audit criteria. The word observation is used by some organizations to indicate a potential nonconformity or a very minor nonconformity such as a defect. This notion is not generally supported by the ISO community or ASQ Quality Audit Division.

4 What is important is that you know the context of how the word is being used for situations you encounter. Finding: As familiar as this term appears (used by many organizations and industries) there are considerable differences of opinion about its definition. Some authors claim a finding is negative, while others claim a finding can be positive and negative. However, most agree that the term finding should describe systemic observations and overall results of an evaluation. 2. New standards introduce new terms and consolidate others: ISO 9000 family of standards and the derivative standards have brought on several new terms in 2000. In the 90s, ISO 9001 was about quality assurance and quality systems. In the 2000 decade, ISO 9001 is about quality management systems. Now, organizations may have several different management systems (such as quality, environmental, safety and health).

5 Each management system (quality, environmental and so on) may be audited. An audit of a quality management system (QMS) is called a quality system audit. An audit of an environmental system would be an environmental system audit. While there has been a proliferation of ISO 9001 spin off standards for different industry sectors, the number of system Auditing standards have been continually reduced. In 1994 countries gave up their individual quality audit standards (in the US it was ANSI/ASQC Q1-1986, Generic Guidelines for Auditing of Quality Systems) in favor of an international consensus Auditing standard called ANSI/ISO/ASQC Q10011-1994, Guidelines for Auditing Quality Systems. In 2002, a new standard (ANSI/ISO/ASQ QE19011, Guidelines for Quality and/or Environmental Management System Auditing ) was issued that combines quality and environmental audit guidelines to further reduce the proliferation of Auditing standards.

6 A fall-out of combining the quality and environmental standards is that there is no definition for a quality audit or environmental audit; just the term audit is defined. The ANSI/ISO/ASQ QE19011, Guidelines for Quality and/or Environmental Management System Auditing standard is an important document for auditors because it is a consensus standard. 3. Compliance versus Conformity: There has been over a decade of disagreement whether compliance and conformance are the same thing or are different. The ISO folks are making a case that there is a difference. They are promoting the idea that a noncompliance occurs when there is violation of a law, regulation, code or contract (if legally enforced). While a nonconformity occurs when there is a difference between actual performance and requirements. Further, the ISO folks prefer to use the term conformity instead of conformance. Even though it is not apparent that this tenet improves the effectiveness Auditing (CQA) Fundamentals II 2005 JP Russell & Assoc.

7 Page 4 of 54 of audits or fixes any problems, it does highlight the need for compliance audits and helps stress the difference between compliance and other types of audits. Purpose of Audits {PART OF THE CQA BOK} [CQA 2004 BOK Description: Describe and examine how audits are used to assess organizational effectiveness, system efficiency, process effectiveness, business performance, risk management and conformance to requirements.] Quality audits were first used around the World War II era. They were used in very complex or high risk operations such as the nuclear, aviation, and electronics industries. The theory being, a check by an independent person of an organization would give the person or organization requiring the check, higher levels of confidence that regulations, standards, and other rules were being followed. Audits are independent investigations of a product, process, or system.

8 By examining documentation, implementation, and effectiveness, quality Auditing is used to evaluate, confirm, or verify activities related to quality1. Auditing has been used by governments as a tool to fulfill oversight responsibilitiesfor regulated industries. An audit or threat of an audit has influenced many organizations to operate within regulatory or statutory requirements. The same would hold true for certain customer supplier relationships, to ensure contractual requirements are being met. Audits directed at ensuring specified rules are being followed are called compliance audits. 1 The Quality Audit Handbook, 2000, Quality Press With the advent of computers and more real time data collection, one might conclude that Auditing would be on the decline. If anything, Auditing has increased. While audits are still being used as an oversight tool to verify compliance, they are now being used internally as a management tool for continual improvement.

9 Management benefits from receiving factual, unbiased, non-binding feedback to improve processes, products, and services. Audits can be used by any type of industry, whether product or service. Audits can be used for any size of organization (large or small). The practices and techniques used in Auditing are the same (or similar) for quality, safety, environmental, or operational Auditing (CQA) Fundamentals II 2005 JP Russell & Assoc. Page 5 of 54 audits. Audits provide management with information that can be used to: - provide input for management decisions (so that quality problems can be prevented or rectified) - inform management of actual or potential risks - identify areas for continuous improvement - assess personnel training effectiveness and equipment capability - provide visible management support of the quality program - verify compliance to regulators 2 The Quality Audit Handbook, 2000, ASQ Quality Press Internal audits can provide information that can be used for improvement and to prepare organizations for external audits.

10 If audits are not effective, they can be a drain on resources and constitute an added cost without apparent benefits. External audits can be used to verify agreements between two organizations and can be used to share information and make technology transfers. External audits can be used to promote mutual confidence, better communication and understanding between parties. 2. Auditing performance: Audits can be conducted for the purpose of determining conformance and performance. Audits can be performed to assess organizational effectiveness, system efficiency, process effectiveness, business performance, risk management and conformance to requirements. The purpose of most audits is to determine compliance or conformity of a system, process, or product. An auditor may determine if the documented system conforms and if it has been effectively implemented. Auditors can also determine effectiveness based on ability of the organization to achieve stated objectives.