Process vs. System Audits
A business process is an integral part of an organizational system that is controlled by management personnel, defined standards and staff expectations. Businesses processes completed by separate departments produce different results and value-added benefits. For example, a warehouse process of lean logistics will accept incoming shipments and then immediately re-ship them to a different destination. The company that receives these shipments may have their own internal process for adding items to inventory and moving materials to the final department destination. These separate processes must be properly controlled by a management system in order to streamline flows and efficiency. Business process audits verify conformity to very detailed controls and requirements. Specific procedures are usually used control individual processes related to work, safety and quality duties.
Steps to Process Audits
In virtually all cases of process audits, as well as most other types of audits, there is a specific step-by-step method to completing the audit successfully. Listed in order, these steps are Preliminary Review, Field Work, Report Generation, and Post Audit Process. Each of these audit steps covers an equally important portion to the ultimate creation of the overall audit.
In the first of the four steps to an audit, the Preliminary Review stage, the need for an audit has been identified and auditors are tasked to the occasion. For example, a toy manufacturer has decided that it wants to become a much more environmentally friendly business, and with that new goal in mind, wants to re-tool many of its processes to use more environmentally conscious processes. As a result, the company gathers a team of process auditors and tells them the exact goals they are seeking. Everything from the sourcing of materials used in manufacturing, to the sourcing of materials used in packaging, to the types of marketing used must be shaped to be more eco-conscious.
What is the main goal of this battery of process audits? What processes must be audited? How will the audits be conducted? When will the audits start, and how long will they last? The Preliminary Review stage of an audit is all about creating a quality audit plan going forward.
The second step to the audit process is the Field Work stage. This is the stage in which the actual audits take place. At this stage, for the hypothetical toy manufacturer above, auditors have taken their places in the manufacturing, packaging, and marketing areas of the business and will study the processes in their current states. Beyond just observing and recording, the auditors may also attempt to discern how these processes could be improved, should this also be a part of the scope of their work as laid out at the Preliminary Review stage previously.
The next stage in the audit process flow is Report Generation. As its name suggests, this audit stage is all about creating a quality audit report that the audit sponsors can glean maximum value from. A high-value audit report should have a number of important qualities such as clarity of communication, accuracy, good organization, and an abundance of high-value information. The higher the quality is of the process audit report, the more the sponsor can benefit from it post audit.
The fourth and final step of the process audit flow is the Post Audit stage. At this point, the audit has been planned, has taken place, and the report about it all has been provided to the sponsoring company. A number of things can happen at this juncture.
The company may simply take the report, dismiss the auditing team, and plan to spend some time to find a way to implement desired change based on the report. The company may also ask the audit team to now move on to helping to plan upcoming changes based on the report and what was observed during the audit. That same company, on the other hand, could go on to request additional audits by the same team or by another auditing team. They may then ask questions like “What is auditing to look like going forward?” Regardless of the path ahead the sponsoring company chooses, this final step finishes the audit process.
Benefits of Process Audits
Process audits can cost companies a significant amount of capital, time, and energy. They can also expose some potentially harmful truths and cause problems to what could have always been an otherwise smooth status quo. So, why do companies sponsor process audits in the face of such costs?
Despite the costs, many companies willingly undergo process audits because the benefits outweigh the costs and risks. There can be many benefits depending on the individual audit. Generally, however, the following represent the most common benefits that drive companies to process audit.
Possibly the most valuable benefit to process auditing is that of transparency and the assurance of effective corporate governance. Those at the top of a company’s management team often are not able to be fully in the know and in subsequent control if they do not fully understand the nature of their company processes. Full awareness is extremely valuable to the extent that it can allow corporate management to steer the company clear of dangerous, illegal, unethical, or otherwise unsustainable practices.
Process audits also offer the benefit of understanding when and how to use certain processes. Perhaps a company’s processes are perfect in terms of what they do and how they are carried out, but the timing or frequency of those processes is inefficient or flawed somehow. Process audits can be immeasurably valuable in discovering these types of issues and subsequently fixing them.
In addition to these great benefits, process audits often simply reveal better ways forward moving into the future for a company. As the company looks to a better operational future, such audits can truly point the way. They can also show which approaches to continue just as they are as opposed to simply pointing out what to change.
Anyone who audits business processes must have a broad knowledge of work standards, procedures, problems and expectations. Familiarity with business information technology, such as enterprise resource planning (ERP), customer service relationship management (CSRM) and warehouse information system (WMS), will be expected. Process auditors should have hands-on experience with process models, systems engineering, quality auditing and inspection techniques. Process auditors must have the abilities to organize and structure workloads while dealing with vague documentation and complex business processes. Business leaders expect process auditors to not only identify non-conformities, but also recommend viable solutions and internal controls. Process auditors must have the ability to build cross-functional relationships with departmental stakeholders. Their excellent conceptual and communication skills will help them with public speaking and presentation meetings. Process auditors should be comfortable collaborating with diverse individuals during interview, inspection, review and monitoring activities.
Organizations of Interest
For those interested in or already working in the process auditing field, there are several organizations involved in the discipline. The following organizations are highly recommended points of association for the process audit world.
This organization represents the greater discipline of auditing as well as many of the sub-disciplines found within the greater field. IANA offers professional advocacy, education, certifications, events, media and books, exclusive membership and membership perks, and more.
The American Management Association provides professional oversight, advocacy, and guidance in all matters of professional business management. Many resources are offered by this organization in regard to business processes, business management, and more.
The discipline of industrial organizational psychology is highly related to business processes and auditing. As such, SIOP, or the Society for Industrial Organizational Psychology is an excellent resource for those seeking additional guidance. This organization also offers a variety of educational, informational, and advocacy resources.
Anyone interested in process audits may pursue a career in occupational safety, quality control and operational management. The majority of process audit opportunities are available in manufacturing facilities because slight product variations, such as a one or two millimeter difference, may result in mis-manufactured products and defects.
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