How to Improve Your Quality Management With Internal Audits

WHY INTERNAL AUDITS MATTER

Customers buy from companies and brands they trust

Building complex products is the work of many teams comprised of various business disciplines. A product can go through numerous iterations before it’s ready for market—and sometimes it’s a small adjustment to a long-standing process that can save time or money.

Those small changes can add up to business success. That’s why smart companies with reputable brands take a holistic approach to achieving and maintaining product quality—they conduct internal audits as part of their quality management strategy by following compliance regulations before they become issues.

The latest analytics demonstrate that 81% of consumers say brand trust is a deciding factor when making a purchase. And 46% of consumers are willing to pay more for a brand they trust. ¹

Why do an internal audit?

Engineering and manufacturing companies face a staggering amount of disruption, daily challenges, supply chain issues, and competition. Audits can be an essential component of a manufacturer’s quality strategy because they can spot possible problems, put remedial measures in place, and work toward continuous improvement.

An audit provides upper management with an alternative perspective of priority areas or areas that may not be reviewed in an external audit but are important. Addressing these areas now with a strategic plan can deliver value through digital innovation, growth, and success.

Challenges in internal auditing

While the benefits are numerous, internal auditing isn’t without challenges such as:

• Resistance from employees who might view audits as scrutiny or criticism, leading to workplace opposition
• Maintaining objectivity
• Ensuring that the auditing team remains unbiased, especially in smaller organizations

Tips for effective internal auditing

• Foster a positive audit culture
• Use your QMS to provide data and information
• Promote audits as controls for improvement rather than tools for criticism
• Provide training
• Equip your audit team with the necessary skills and knowledge to conduct effective evaluations
• Use standardized checklists to ensure consistency; use checklists that align with industry standards and organizational objectives
• Consider engaging external expertise
• If objectivity is a concern, consider bringing in third-party auditors for a fresh perspective

Internal versus external audits

A key distinction between compliance audits (often known as third-party or external audits), and internal audits is—who does the audit. Internal audits are performed by internal auditors who work for your company. For external audits, you’ll work with certified outside auditors.

Internal audits yield vital information that can help you:

• Ensure compliance verification
• Enhance business operations and reduce errors
• Improve efficiencies
• Get better control of risk management processes—improve vulnerabilities
• Improve workflows
• Decrease costs, improve cost recovery, and increase profits
• Correct any processes not performing well
• Keep employees alert about responsibilities to improve their efficiency
• Explore potential risks
• Increase stakeholder confidence

An audit can exploit your strengths or weaknesses:

• Supply chain uncertainties
• Recruitment and retention issues
• Adaptation to your hybrid working environment
• Addressing the impact of inflation
• Navigating geopolitical uncertainties
• Technology and data analytics
• Preparedness for unscheduled audits
• Environmental Social and Governance (ESG) reporting
• Cybersecurity and data privacy
• Digital disruption and new technologies

6 STEPS TO PLANNING AN INTERNAL AUDIT

Internal audit teams have the unique opportunity to re-envision the impact they can make for the company by restructuring their approach, so it aligns with current business practices and industry trends.

Some areas to consider before you start:

1. Who Conducts the Audit?

A key first step in determining the audit is—who is going to conduct it—your Regulatory or Quality teams or a hybrid? After making that determination, you’re ready to start the planning process.

What are the team responsibilities? Define roles:

• Implement and execute the audit procedures
• Establish an understanding of the role each team will play (e.g., host, scribe, record/document prep)

The role of an internal auditor is to:

• Conduct interviews
• Inspect evidence
• Test controls
• Read policies to understand the environment.
• Validate that controls and processes are working well

The internal audit team reviews any standards, frameworks, and regulatory requirements relevant to the project or program. Validate that records are up to date and readily accessible as needed such as:

• Product and facility, registrations, licenses, DoCs and certificates
• Submission records (particularly, regulatory impact assessments and letters to file)
• Quality Agreement for outsourced services (internal and external)

2. Create Direct, Fact-Finding Oriented Questions

• What goals do you want to accomplish?
• How does the process support the company in achieving its goals and objectives?
• What risk(s) does the audit address?
• What processes were audited in the past and, if so, what were the results of the previous audit(s)?
• Were audit findings or nonconformities investigated and remediated according to the action plan?
• Have there been significant changes in the process recently or since the previous audit?
• What is the scope of the project, and what specific requirements need to be met for a successful outcome?
• Pick the ideas that will drive immediate impact with limited or no additional budget

3. Preparing Your Strategy

• Construct your daily operations–which areas or departments will be evaluated and inspected
• Shift from a one-size-fits-all approach to diversifying the nature of audit activities, including issues-based reviews or audit workshops
• This is the time to review any previous audits and understand the results

4. Conducting the Audit

• Collect all relevant documented information that relates to the process you’ll be auditing such as metrics, work instructions, charts, diagrams, process maps, workflow charts, and control plans.
• Prepare a checklist of basic audit questions such as: What are your responsibilities? How are your records maintained?

5. Reporting the Findings

• Conduct meeting(s) with the process owner(s) to discuss findings such as weaknesses to be addressed or areas improved
• Discuss the positive and potential improvement areas so the process owner will get better value from the audit.
• Continuously monitor enhancements or changes
• Include a summary of the findings and recommendations for improvements in your report, corrective actions, and next steps
• Manage monitoring processes, replacing legacy systems, employee training, and fine-tuning processes or workflows

6. Communicating Results to Upper Management

• Communicate to upper management audit results and recommendations.
• The audit team can schedule breakout sessions with audited teams to address resolution.