Technology Tip: Software and Audits Top 10
April 18, 2017 - Kestrel Management • dynaQ
All types of business and operational processes demand a variety of audits and inspections to evaluate compliance with standards—ranging from government regulations, to industry codes, to system standards (i.e., ISO), to internal corporate requirements.
Audits provide an essential tool for improving and verifying compliance performance. Audits may be used to capture regulatory compliance status, management system conformance, adequacy of internal controls, potential risks, and best practices.
By combining effective auditing program design, standardized procedures, trained/knowledgeable auditors, and computerized systems and tools, companies are better able to capture and analyze audit data, and then use that information to improve business performance. Having auditing software of some sort can greatly streamline productivity and enhance quality, especially in industries with many compliance obligations.
The following tips can help ensure that companies are getting the most out of their auditing process:
- Have a computerized system. Any system is better than nothing; functional is more important than perfect. The key is to commit to a choice and move forward with it. Companies are beginning to recognize the pitfalls of “smart people” audits (i.e., an audit conducted by an expert + notebook with no protocols or systems). While expertise is valuable, this approach makes it difficult to compare facilities and results, is not replicable, and provides no assurance that everything has been reviewed. A defined system and protocol helps to avoid these pitfalls.
- Invest time before the audit. The most important time in the audit process is before the audit begins. Do not wait until the day before to prepare. There is value in knowing the scope of the audit, understanding expectations, and developing question sets/protocol. This is also the time to ensure that the system collects the data desired to produce the final report.
- Capture data. Data is tangible. You can count, sort, compare, and organize data so it can be used on the back end. Data allows the company to produce reports, analytics, and standard metrics/key performance indicators.
- Don’t forget about information. Information is important, too. Information provides descriptions, directions, photos, etc. to support the data and paint a complete picture.
- Be timely. Reports must be timely to correct findings and demonstrate a sense of urgency. Reports serve as a permanent record and begin the process of remediation. The sooner they are produced, the sooner corrective actions begin.
- Note immediate fixes. During the audit, there may be small things uncovered that can be fixed immediately. These items need to be recorded even if they are fixed during the audit. Unrecorded items “never happened”. Correspondingly, it is important to build a culture where individuals are not punished for findings, as this can result in underreporting.
- Understand the audience. Who will be reading the final report? What do they need to know? What is their level of understanding? Not all data presentation is useful. In fact, poorly presented data can be confusing and cause inaction. It is important to identify key data, reports desired, and the ways in which outputs can be automated to generate meaningful information.
- Compare to previous audits. The only way to get an accurate comparison is if audits have a common scope and a common checklist/protocol. Using a computerized system can ensure that these factors remain consistent. Comparisons reinforce and support a company’s efforts to maintain and improve compliance over time.
- Manage regulatory updates. It is important to maintain a connection to past audits and the associated compliance requirements at the time of the audit. Regulations might change and that needs to be tracked. Checklists, however, may remain the same. Companies should have a process for tracking regulatory updates and making sure that the system is updated appropriately.
- Maintain data frequency. For data, frequency is key. Consider what smaller scope, higher frequency audits look like. These can allow the company to gather more data, involve more people, and improve the overall quality and reliability of reports.
A well-designed and well-executed auditing program—with analysis of audit data—provides an essential tool for improving and verifying business performance. Audits capture regulatory compliance status, management system conformance, adequacy of internal controls, potential risks, and best practices. And using a technology tool or system to manage the audit makes that information even more useful.
Submitted by: Evan Fitzgerald