The Secrets of the Search for Audit Best Practices

“Benchmarking provides an inventory of creative changes that other companies have enacted” said John Langley. This is a great definition of an effective continuous improvement process which is unfortunately often under-used or not used to its full.

One of the most important things I learned during my professional career is that being open and looking outside for inspiration and ways to improve your organisation’s performance is key for success. Searching for industry best practices is a proactive process that leads to superior performance when approached on a partnership basis in which all parties can expect to gain from the information sharing. From experience, this goes well beyond the world of auditing but can obviously be applied to it with potential tremendous successes and benefits.

Ideally, benchmarking should be a continuous process of measuring against the best, setting goals based on the findings and tracking progress toward achieving the benchmarks. Through benchmarking, companies find examples of superior performance and analyse the processes and practices driving it. Organisations then improve by tailoring and incorporating these best practices into their own operations — not by copying, but by innovating and recreating.

Why would you embark your audit organisation upon benchmarking?

Audit organisations willing to evaluate and improve their performance, and embrace change in a proactive rather than reactive manner, see benefits in using benchmarking. The process can be used at any time and for various scopes such as policies, strategies and objectives, processes, products and services or even their organisational structure.

Organisations may consider different types of benchmarking such as internal (benchmarking of activities and processes within the organisation) or competitive (benchmarking of performance or processes with competitors) or even generic (by comparing strategies, operations or processes with unrelated organisations).

From experience in conducting and participating in benchmarking studies, including companies far outside the particular organisation’s field of activity, helps to learn and innovate, and is definitely a way to shake things up and make real change.

What makes benchmarking successful?

There are several factors for your audit organisation to consider to ensure benchmarking brings full value:

  • There is first a need to define the scope of the subject for benchmarking as well as the process for selecting benchmarking partners, including the associated confidentiality rules.
  • Determining the indicators for the characteristics to be compared, and the methodology for data collection and analysis, will be a second pre-requisite.
  • When data are collected and analysed, there will be a need to identify the performance gaps and the associated opportunities for improvement.
  • Implementing the defined improvement plans, monitoring their deployment and ensuring learning is captured will be final steps to consider for success.

Successful benchmarking will depend on various factors that include a strong support from top management, a companywide acceptance, the methodology used to apply benchmarking and the rigour by which improvement plans are implemented. Adhering to the benchmarking process as described above is key to success but far from being enough. An active commitment to benchmarking from management is essential. This includes:

  • A willingness to share information with benchmark partners
  • A willingness to change and adapt based on benchmarking findings, and
  • An openness to new ideas and creativity in their application to existing processes.

What questions might be relevant to benchmark audit organisations?

Here are examples of questions that an audit organisation might find useful  to use in benchmarking audit programmes, protocols and practices:

  1. What is the mission of the audit organisation / programme?

  • What is the role or purpose of audit in your organisation?
  • Who is (are) the customer(s) of your audit program?
  • What are the customers expectations?
  • How are these expectations aligned with the business needs?
  • Was there an evolution of the mission in the last years? Which and why?
  • How do you see the mission of your audit program / organisation evolve in the future and why?
  1. What is the scope of the audit programme?

  • Which facet(s) of your management system are being audited and what is the rationale?
  • Who are the auditee and why?
  • Are there any exclusions and why?
  • Was there an evolution of the scope of the audit program in the last years? Which and why?
  • How do you expect the scope of the audit program to evolve in the future and why?
  1. What is the audit standard?

  • Which standards are the locations being audited against and by whom?
  • Is compliance to applicable legal requirements included and how?
  • Was there a significant evolution of the audit standard in the last years? Which and why?
  • How do you expect the audit standard to evolve in the future and why?
  1. What is the process to plan audits?

  • What risk aspects or data sources do you take into consideration in evaluating the risk profile of a facility?
  • What are the drivers for doing an audit / what criteria do you use to decide who and how often to audit?
  • What is your risk based audit planning framework? How agile is it?
  • Was there an evolution of the audit planning process in the last years? Which and why?
  • How do you expect your risk based audit planning framework to evolve in the future and why?
  1. How are gaps identified?

  • How is the auditor preparing for the audit? What are the information sources?
  • How are gaps identified during an audit?
  • If using a checklist approach, what is it and what benefits and disadvantages do you see in using it?
  • If another approach is used, what is it and what benefits and disadvantages do you see in using it?
  • Was there an evolution of the approach used in the last years? Which and why?
  • Are you planning to change your approach in the future and if so why and how?
  1. How is risk evaluated / measured?

  • When gaps are detected, are risks quantified (scored) or qualified (risk rated) and if so how?
  • What are the benefits and disadvantages of the methodology used?
  • Was there an evolution of the methodology used in the last years? Which and why?
  • Are you planning to change the methodology used in the future and if so why and how?
  1. How are audit findings / risks reported?

  • What audit findings are being reported? Are you only focusing on gaps or do you also consider best practices? Why?
  • What is the methodology used to rate the audit findings? What are the benefits and challenges?
  • How do you handle repeat findings?
  • What is the methodology used to rate the overall audit outcome? What are the benefits and challenges?
  • What is the methodology used to rate the overall location status when audit results per facet of the management system differ? What are the benefits and challenges?
  • Was there an evolution of the methodologies used in the last years? Which and why?
  • Are you planning to change the methodologies used in the future and if so why and how?
  1. How and to whom are audit results communicated?

  • How and to whom are audit results communicated?
  • Do you report audit outcomes externally ? Do you see this coming and why?
  • Are there any consequences or rewards implications of the audit result? If so which and what are the benefits and challenges?
  1. How is auditor’s competence / capability ensured?

  • What are your auditor qualification criteria? What are your training and calibration programs?
  • Are you using specialised auditors or generalist (multi-facet) auditor? What are the challenges and benefits?
  • Are you using full time auditors (dedicated) or part time job / internal or external or a mix thereof? What are the challenges and benefits?
  • What is the auditor profile used (e.g., talent pipeline versus end of career)?
  • How do you ensure calibration amongst auditors?
  • Was there an evolution in the last years? Which and why?
  • Are you planning to change something if so why and how?
  1. How is the information actioned after the audit and what is the role of the auditor?

  • What happens after the audit and who is responsible for what at all levels?
  • What are the challenges and benefits of the current approach?

The above questions are just examples and are provided as such to seed for more. The questions you will be using should depend on the scope and objectives of the benchmark project and need to be carefully selected to suit the needs of the audit organisation and of its benchmarking partners.

There are multiple benefits in benchmarking your audit organisation and they are all leading to superior performance. Do not hesitate to organise a benchmarking project and ask your peers to participate. Say yes if you are invited to participate to one. You will definitely not regret it !

By Marc Cwikowski
July 28, 2020

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