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    Quality Audits for Improved Performance
    Quality Audits for Improved Performance
    Quality Audits for Improved Performance
    Ebook203 pages2 hours

    Quality Audits for Improved Performance

    By Dennis R. Arter

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    About this ebook

    Perfect for anyone charged with implementing a quality audit program or those performing the audit, this book is an ideal reference on the established techniques of quality auditing. This third edition serves as a guide to learning and applying the basics of quality auditing, and expands on the basic auditing principles by showing how the quality audit can be used to improve business performance. This new edition includes:

    - An expanded background and history of quality auditing
    - A general model for auditing any quality management system
    - Added information on process audits and the system-process-product relationship
    - Auditor competencies and qualifications
    - An explanation of audit reports and the role of the auditor after the report
    - New material on remedial and corrective action
    - Example audit procedures and a glossary of auditing terms

    Author Dennis Arter addresses both internal and supplier auditing as it relates to any quality management system, including ISO 9001, GMP, automotive, and others. He provides supportive examples and checklists throughout the text to help make this book the best single-source guide on the subject. Quality practitioners, registrars, and those preparing for the ASQ Certified Quality Auditor (CQA) exam will find it to be an invaluable reference.
    LanguageEnglish
    PublisherASQ Quality Press
    Release dateNov 6, 2002
    ISBN9780873895729
    Quality Audits for Improved Performance

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      Book preview

      Quality Audits for Improved Performance - Dennis R. Arter

      Quality Audits for Improved Performance

      Dennis R. Arter

      ASQ Quality Press

      Milwaukee, Wisconsin

      Quality Audits for Improved Performance, Third Edition

      Dennis R. Arter

      Library of Congress Cataloging-in-Publication Data

      Arter, Dennis R., 1947–

      Quality audits for improved performance / Dennis R. Arter.—3rd ed.

      p. cm.

      Includes bibliographical references and index.

      ISBN 0-87389-570-3 (Soft Cover, Perfect Bind : alk. paper)

      1. Quality control—Auditing. I. Title.

      TS156 .A76 2003

      658.5'62—dc21 2002152028

      © 2003 by ASQ

      All rights reserved. No part of this book may be reproduced in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher.

      ISBN 0-87389-570-3

      Publisher: William A. Tony

      Acquisitions Editor: Annemieke Koudstaal

      Project Editor: Paul O’Mara

      Production Administrator: Jennifer Gaertner

      Special Marketing Representative: Robin Barry

      ASQ Mission: The American Society for Quality advances individual, organizational and community excellence worldwide through learning, quality improvement and knowledge exchange.

      Attention: Bookstores, Wholesalers, Schools and Corporations: ASQ Quality Press books, videotapes, audiotapes, and software are available at quantity discounts with bulk purchases for business, educational, or instructional use. For information, please contact ASQ Quality Press at 800-248-1946, or write to ASQ Quality Press, P.O. Box 3005, Milwaukee, WI 53201-3005.

      To place orders or to request a free copy of the ASQ Quality Press Publications Catalog, including ASQ membership information, call 800-248-1946. Visit our Web site at www.asq.org or http://www.asq.org/quality-press.

      Quality Press

      Call toll free 800-248-1946

      Fax 414-272-1734

      www.asq.org

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      E-mail: [email protected]

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      Contents

      Preface

      Acknowledgements

      Things both old and new

      Chapter 1. Overview

      Brief history of auditing

      What is an audit?

      General model of auditing

      Who’s auditing whom?

      The compliance audit

      Shortcomings of the compliance audit

      Performance audits

      Performance audit applications

      Product audits

      Process audits

      System audits

      Six kinds of audits

      Audit defined

      Management principles

      Fundamental rules for auditing

      May auditors say good things?

      A different philosophy

      Chapter 2. Audit Program Manager

      Accountability

      Audit schedule

      Resources for the audit program

      The client

      Chapter 3. Preparation

      Phases of the audit

      Steps in the preparation phase

      Purpose

      Scope

      The audit team

      Second rule of auditing

      Authority

      Requirements

      Understand the process

      Audit plan

      Evaluate documents

      Work papers

      Summary

      Chapter 4. Performance

      Opening meeting

      Gather the facts

      Tracing

      Interviews

      Interview technique

      Perceptions

      Team meetings

      Daily briefings

      Onward

      Chapter 5. Reporting

      The report is your product

      Report characteristics

      Desire to trust

      Inferences

      Judgments

      Pain and pleasure

      Findings

      Preparing the finding sheets

      Recommendations

      Presenting your information

      Six or less

      Overall conclusions

      Exit meeting

      Formal report

      Report distribution

      Distribution of the report

      Wrap-up

      Chapter 6. Follow-up and Closure

      Closure phase

      Remedial action

      Corrective action

      Corrective action response

      Adequacy of the response

      Records

      A recap

      Chapter 7. Summary

      Appendix A. Example Procedure

      Purpose and scope

      Definitions

      Personnel qualification

      Scheduling

      Audit planning

      Performance

      Audit report

      Follow-up

      Records

      Forms

      Appendix B. Glossary of Terms

      Preface

      You are about to be introduced to some old and new approaches to the application of audits. Intense global competition and remarkable changes in technologies require us to challenge past practices. Old adversarial methods of seek, point, and blame will no longer work. Using some of the basic financial audit principles, we can examine the usefulness and implementation of all controls as they apply to internal and external operations. Audits, along with other forms of evaluation, can help us to determine if our own controls and our supplier controls work effectively.

      Since this text was first published in 1989, some changes in auditing have taken place. The ISO 9001 standard, and conformity assessment to that document, caused interest in auditing to explode. With this intense interest in auditing, new ideas and techniques came along. The published literature has doubled in size and tripled in content. Auditing is now used around the world. Business and government are using the audit to improve the functioning of the enterprise. I have been fortunate to participate in this changing environment. Along the way, I discovered some underlying truths. Those truths are now quite clear to me. I hope they become clear to you.

      Acknowledgements

      Some major forces have influenced me in the past 30 years. As an officer in the U.S. Navy nuclear submarine force, I first learned about management and leadership principles. Upon leaving the Navy, I discovered the basic quality concepts while employed by a nuclear power utility. I also developed my basic audit skills. Although I had some help from the existing consensus standards, it was mainly a trial-and-error process. I made several mistakes, but I learned from them. I started training others in audit methods through the use of a package course developed in 1978 by Mr. Frank X. Brown for the U.S. Department of Energy. Seeing a need for auditing outside of the nuclear industry, I struck out on my own as a consultant in the fall of 1984. Since then, I continue to learn from each company I visit and each class I teach.

      The American Society for Quality (ASQ) helped me more than I could have imagined. Networking with the Quality Audit Division and other groups in ASQ exposed me to different methods and uses for my chosen profession. Conference presentations force me to keep thinking. The Institute of Internal Auditors (IIA) and, of course, Larry Sawyer, helped me to put quality auditing in perspective with financial and operational auditing.

      Things both old and new

      Auditing, in its many forms, is a cost-effective means of improving the enterprise. The methods described in this book are both old and new. They may be difficult to accept and even more difficult to implement. They do, however, work. This book will cause you to think. Enjoy!

      1

      Overview

      Brief History of Auditing

      The word audit originally comes from the practice of recording the cargo on a ship by listening as the crew called out the items and quantities. The word comes from aural (to hear). The auditor represented the king and was there to provide assurance that all taxes on that cargo would be properly recorded.¹ From the very beginning, auditors were associated with controls and compliance. It is interesting to note that the original meaning of audit continues in a classroom setting. When you audit a class, you do not participate or receive credit on your transcript. You only listen.

      Auditing, as practiced today, has its roots in financial applications. As Western civilization moved from the Middle Ages and into the Renaissance period, money lending became important for trade and kingdoms. There was a need for outside and unbiased assurance that both borrowers and lenders were telling the truth. Even today, the majority of auditors work in the financial services industries, such as banking, taxes, insurance, and accounting. Financial auditors are expected to examine the accounts and records to see that they are truthful. They match recorded information against accounting requirements to arrive at their findings of fact. Because the auditors are seen as unbiased, their reports are accepted by the stakeholders as truthful. Society will always have a need for financial auditors.

      After World War II, the military was faced with tremendous new and powerful technologies with the potential to cause great harm. Tanks, bombs, and airplanes were much more complicated and quite risky. Nuclear energy, first used as a weapon of destruction, was being developed for civilian power generation. The 1950s were exciting times but also scary. In their search for tools to combat these new risks, the admirals and generals adapted the auditing methods of the accountants. One of the first quality management standards, MIL-Q-9858 (circa 1954), contained a brief paragraph on auditing. At the time, people really didn’t know how to do it, but they knew it needed to be done. Like many other new things, we imposed the requirements on the suppliers but not ourselves. Perhaps our suppliers could figure it out.

      Military and nuclear auditors working for the contractors started auditing their own programs. They began to audit the subcontractor’s work. The government started auditing the contractors. They all made it up. Sometimes, it worked. Often, it didn’t work. A decade later, by 1968, we had the beginnings of an auditing standard in the ASQC C1 document for supplier quality systems. It said, Quality programs will be audited by the buyer for conformance to the intent of this specification. Disapproval of the program or major portions thereof may be cause for withholding acceptance of product.²

      Meanwhile, the financial folks began to look outside of accounts payable and accounts receivable. The Institute of Internal Auditors (IIA) published their rules for operational auditing in 1978.³ These continue to be updated and extensively used. Operational audits were developed to examine the controls and risks of the organization. They probed and questioned to find weaknesses that could lead to loss and fraud. The enterprise was becoming more complex and that complexity allowed bad things to occur. The operational auditor became an important line of defense for the smart enterprise. These auditors usually report to a committee on the corporate Board of Directors. They are often called corporate auditors.

      Even the government people outside of military and nuclear areas began to examine the value of auditing their nonfinancial operations. Throughout the late 1970s and early 1980s, increased pressure demanded accountability for government operations and spending programs. The U.S. General Accounting Office, the investigative arm of Congress, first released their Government Auditing Standards in 1981. Because of the color of the cover, this was called the Yellow Book. It continues to be an excellent source of information for all auditors.⁴

      In response to the new global competition in the 1980s, manufacturers needed to change their ways of conducting business. They needed to do a better job of defining customer requirements. They needed to better control their manufacturing processes. They needed to gather data and make decisions from those data. They needed auditors. The U.S. standard on quality systems, Z-1.15 (1979), contains a pretty good description of those early internal and supplier audit quality programs.⁵ The Canadians published their CAN3-Q395 document in 1981, based largely on the work done by the British and the IIA.⁶ Even today, many of our auditing words can be traced to that Canadian standard. After much difficulty, the ASQ Quality Audit Division moved their version of the Canadian Q395 through the committees and it was published as Q1 in 1986.⁷

      Auditing for software took a strange turn in the mid-1980s. In 1988, the Institute of Electrical and Electronic Engineers (IEEE) released standard 1028 called Software Reviews and Audits. The intent of these audits was to give project managers an indication of the thoroughness and completeness of an activity before it progressed to the next step. The audits were checks to see that all the paperwork was completed. These audits were not very valuable.

      Interest in quality auditing for business applications really took off in the second half of the 1980s. The Cold War was ending. Communication technologies were developing into an Internet. World trade agreements were signed. All of this led to the first comprehensive international standard on quality management—ISO 9001 (1987).⁸ The European Community, Canada, and Australia were the first to apply conformity assessment, formerly used for product certification, to the new standard. Of course, the registrars needed a standard for these third-party assessments. As they have done many times before, the British took a draft committee document and published it as BS7229 in 1989.⁹ The approved international document came out two years later in three parts. ISO 10011-1 was published in December of 1990. Parts 2 and 3 came out in May of 1991. The United States took the three separate international documents and published them as one in 1994. It was called Q10011.¹⁰ The 1981 Canadian Q395 was the foundation for all these national and international documents.

      After the success of conformity assessment to quality management systems (ISO 9001), the

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