Audit! What is audit?

Audit! You must have heard the word ‘audit’ in your life many times.

What is an audit? Audit definition.

An audit/auditing is an act of verification documents, process, input, the output of a business process with set standards, work instructions guidelines, statutory requirements, regulations & law by the auditor in the presence of the auditee. An audit can be executed by an external or internal auditor. There are different types of audits executed in the industry. There are different types of audits executed in the industry. Audit type is based on operational, international/national standards, statutory, and regulatory requirements. Eg. An Information security audit is essential for the IT industry to achieve ISO 27001 certification, and to maintain compliance with data protection and privacy regulations.

What is the purpose of auditing?

1. Ensure compliance to statutory requirements, regulations, laws, and rules.
2. To discover a gap in the business process.
3. To overcome the gap in the business process by implementing corrective actions with a continuous improvement goal.
4. To discover the area of improvement in the organization and strengths in the business process.
5. To obtain certification such as ISO 9001:2015, ISO 14001, IATF, VDA.
6. To prevent fraud, forgery in accounting or other business processes.
7. To mitigate the risk involved in the business processes.
8. Auditing helps management to evaluate operational efficiency and pain areas in an organization.
9. To improve business processes for better saving and profit.

Types of Auditing:

1. Financial Audit
2. Software Audit
3. Information Security Audit (ISO/IEC 27001)
4. Environmental Audit (ISO 14001)
5. Quality Management System Audit (ISO 9001) (ISO 19011)
6. Product Audit
7. Process Audit
8. Statutory and Regulatory Audit
9. Internal Audit
10. External Audit
11. 3rd Party Audit
12. Forensic Audit
13. Health & Safety Audit (ISO 45001)
14. 5S Audit
15. Security Audit
16. Food Safety Audit
17. Fire Safety Audit
18. Government Body audit
19. Customs Audit
20. Mainframe Security Audit
21. Academic Audit
22. Supply Chain Security Audit
23. Income Tax Audit

Audit Process/Phases:

1. Audit Planning
2. Audit Execution
3. Data and audit observation recording
4. Audit Report Preparation
5. Publishing audit report with a recommendation, areas of improvement, strengths, non-conformity.
6. Audit non-conformities close up.

Auditor:

An authorized, qualified & trained person who conducts audits as an independent observer & assessor. An auditor is trained personnel within an organization or from an outside organization who verifies documents, records, financial statements, business process, procedures, standard operating procedures with respective compliance, statutory & regulatory requirements.

Types of Auditor

Internal Auditor:

An employee of the organization who conducts audits as an independent reviewer/auditor within the organization. An independent internal auditor conducts audits as per regulation, policy, standards, and procedure. Internal audits can be conducted based on an audit plan, it can be conducted quarterly or yearly. Internal audits are conducted by cross-functional team members. Eg. The Quality Management System audit of the research and development department is conducted by the quality team.

External Auditor:

A firm or person from a certification body or external audit firm conducts audits at their client as an independent auditor. In the manufacturing industry, customer conducts an audit at their supplier end to verify quality management system, manufacturing process, and compliance.

Eg. a Government body auditor, an auditor from the certification body.

Auditor Qualification:

Conducting an audit requires qualification and training. To lead an audit, an auditor must be aware of compliance requirements, statutory and regulatory requirements. Eg. To lead an environmental audit, the auditor must be aware of ISO 14001 standard and its applicable clause.

Every organization or certification body (audit firm) provides regular training to its lead auditors to maintain auditing skill set and competency. An auditor needs to maintain auditing skills and upgrade competency regularly. A certified auditor must conduct a minimum number of audits every year to maintain auditing skills and qualification status.

It’s standard practice across all industry segments to maintain the qualification status of auditors and their auditing practice.