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Internal Audits in very small businesses

Discussion in 'ISO 19011 - Auditing Management Systems Guidelines' started by Andy Nichols, Mar 20, 2020.

  1. Andy Nichols

    Andy Nichols Moderator Staff Member

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    I was discussing Internal Audits with a small business owner recently. I finished up wondering the real value of internal audits, when some small business owners are deeply embedded in the operation(s) and processes. Your thoughts?
     
  2. Eric Twiname

    Eric Twiname Well-Known Member

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    Howdy Andy,
    I was in a 100+ person company where internal audits had decent value...now I'm in a tiny company (not ISO).

    If I were to be ISO in a max 5 person company, formal internal audits would have little to no value...but review of "are we still doing it right", essentially an informal audit, is almost a daily thing...certainly a weekly thing.

    I think the formal audit process (whatever that is) has little value, and really becomes more of a paperwork exercise. The "audit" goes on all the time...then it is down to what records are kept of that activity.
    If I was going to be ISO in a tiny company, I would hire an external internal auditor (not an employee) and then have to raise prices accordingly.
    In a company where the owner is hands on every day in every system, it's too hard to "prove" objectivity.
     
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  3. Golfman25

    Golfman25 Well-Known Member

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    Zip, zero, nada, etc. I don't need an "audit" to know what's going on.
     
  4. Eric Twiname

    Eric Twiname Well-Known Member

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    LOL...Me neither, 'cause I'm the bloke who done did it.

    Looking outside of the "Audit is a capsulized event", and treating the term "audit" as a review to confirm/deny adherence to prescribed procedures...audit has a fine value.
    I'm the one who determined the procedures.
    I'm the one following them (or not).
    If I am not, there's a reason I'm not...and I'm the one who can change the procedures to what I think they should be right now.

    ...thus my contention that it is a paperwork exercise for a tiny company. The "audit" happens all day every day.
     
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  5. tony s

    tony s Well-Known Member

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    The top management is, definitely, the "audit client" (defined by ISO 19011 as "person requesting an audit). An audit client, for a small company, with hands on involvement in the operation will have difficulty to see the value of internal audits that must be done at "planned intervals".
     
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  6. Eric Twiname

    Eric Twiname Well-Known Member

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    Me hitting the same drum again...
    The planned interval can be "daily" or "hourly"...if the audit is no longer seen as a separate capsulized event.

    I think we're all used to treating the word "audit" as a separate, capsulized thing...and most of the time this is correct.
    But does it have to be a separate thing? Or can it be an "every time I'm doing something I think about it" kind of thing?
    Is the box really there? Or is it simply normal perception guided by familiarity with larger companies.

    But then again, the person who would be "auditing as they go" would most certainly be auditing their own work...
     
  7. Andy Nichols

    Andy Nichols Moderator Staff Member

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    I think of an audit in a very small company as more of a "Gemba". My concern is, however, that a CB auditor won't see it that way, if the company is ISO 9001 certified...
     
  8. tony s

    tony s Well-Known Member

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    Just very recently (before our government declared a lockdown), a surveillance audit of a 9-person trading company resulted to 3 Observations. One Obs was raised about the "impartiality and objectivity" of the internal auditor that was assigned to audit the internal audit process.:(
     
  9. Eric Twiname

    Eric Twiname Well-Known Member

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    Surprised to see you concerned about such things...
     
  10. Andy Nichols

    Andy Nichols Moderator Staff Member

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    :D;)
     
  11. Guy Léger

    Guy Léger Member

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    ISO 9001 :2015 is based in the concept of continuous improvement. It's designed to be usefull for organization of all sizes, whatever their sector of activity...
    Because the objectives of audit programs take under consideration the level of maturity of quality management system such as the occurence of non-conformities, incidents or complaints, internal audit in a small business can improve internal communication between departments and the control of documented information relevant to the quality management system...
    A Quality department must be at the center of the activities of an organization...but it's still difficult to understand this importance in some small businesses...And some departments of small businesses sometimes tend to carry out their activities and tasks without informing the quality department...
    However, an internal audit can, for example, make it possible for other departments to understand that their quality department should have a copy of the treatment of each non conformity, complaint or reclamation, in each step, and that every distribution of these document to client is recorded...the internal audit can tell "who must transmit?...who must sign..? and how and where to record and archive.?.."
    And this communication allow the monitoring of performance indicators and the control of these records, for fututur potential conflicts with relevant customers"...this is just one of the added values of internal audit in small business...
     
  12. Andy Nichols

    Andy Nichols Moderator Staff Member

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    That's only PART of it. You overlooked PLAN, DO, CHECK as well. If you have no plan, it's an issue.

    You've not worked in very small organizations, I can tell!
     
  13. RoxaneB

    RoxaneB Moderator Staff Member

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    I don't quite agree with this statement. Communication within small businesses is not often an issue. Why? Because they're small - people either work very closely together or, and this more likely the case, people perform multiple functions (e.g., an individual may be responsible for both quality and production).

    The other point I don't necessarily agree with is your statement that objectives of the audit program take the level of maturity into consideration. Should they? Yes! Do they? Not always. Many organizations simply perform audits to the requirements of the standard and do NOT include the requirements of the organization beyond what is written in the procedures.

    Again, I disagree. Perhaps small businesses operate differently in your area, but in my experience, small businesses cannot afford to have one department (or one person) solely dedicated to the role of quality. Quality falls under everyone's responsibility meaning there is no need to inform quality because they ARE quality.

    An internal audit should not be the activity responsible for other departments to understand what the processes are. This falls under management and/or training.

    An internal audit within a small business is an opportunity for individuals who perform multiple roles and have multiple responsibilities to place themselves in a different role for a brief period of time and attempt to objectively assess the effectiveness and efficiency of their management system. I say 'attempt' because it is not possible for some people to set aside their bias and consider that their organization's management system may not be perfect (especially if they helped to develop and implement it). This inability is what may lessen the value of the audit within the small business.
     
    Last edited: Mar 25, 2020
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  14. Eric Twiname

    Eric Twiname Well-Known Member

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    How would an internal audit improve communication between the departments of a three person company?

    The three people are talking all day long about everything...shipping, orders, what and how they're doing it, sports, family strife, the movie you saw last night and what new customers are on the horizon.
    There's typically a ton more communication in a small company...it doesn't need the help of an audit.
     
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  15. Guy Léger

    Guy Léger Member

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    I respect all of your opinions, but please just try to understand me, by reading this answer carefully, because I have tried to give an answer to each objection..

    According to wikipedia, Small Business range from 15 employees under the Australian Fair Work Act 2009, 50 employees according to the definition used by the European Union, and fewer than 500 employees to qualify for many US Small Business Administration Programs.

    Whether a company is selling or manufacturing, certains department remain key to basic operation: Production, Sale and Pourchasing, Finance and Accounting, Quality and Administration...

    The employees in the Quality department do not always have the same skills as those in Production department, in terms of professionnals education and experience of course...and in small companies manufacturing mechanical assemblies, the employees have tendencies to neglect the Quality department( saying it by experience)...May be not in all Small Businesses, but in other yes...The communication problem always arise internally, when production find that the Quality department disturb with the requirements to comply with..."our work is good and we usually did that like that in our previous work"...some Small Businesses often have problems implementing companies policies and quality requirements...

    According to ISO 19011: 2018, the audit objectives can take under consideration " the level of maturity of the management system..." (may be not all the times becauses internal audit may have several objectives to be apply in differents period )

    According to ISO 9000: 2015, Audit is a systematic, independant and documented process for obtaining evidence and evaluating it objectively to determine the extent to which the audit criteria fulfilled...
    "Note 1: the fundamental elements of an audit include the determinition of the conformity of an object according to procedure carried out by personnel not being responsible for the object audited...
    Note 3: Internal audits are conducted by, or on behalf of, the organization itself for management review and other internal purposes..."

    Sincerely
     
  16. Andy Nichols

    Andy Nichols Moderator Staff Member

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    This maybe a language issue. Small businesses - any business actually - doesn't operate effectively as "departments". The QMS is about PROCESS(ES). A small, very small business has a few people involved in nearly every process in one way or another.

    Thinking of a QMS as departments doesn't work. No matter what "ISO-Says", there is a practical reality to implementations involving just a few people. Hvae you had any experience at this level? It's my everyday job, hence my OP.
     
  17. Golfman25

    Golfman25 Well-Known Member

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    The best move I have ever made is to get rid of the Quality Manager position at my company of 20-30 employees. All it did was place quality in a department -- it was their job. Without said department, everyone is responsible. The finger pointing is gone.
     
  18. Guy Léger

    Guy Léger Member

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    Excuse me but I worked in the past for a companies with less than 60 people, in a QA/QC department...and we had as subscontractors some companies with 40 people...My team and I usually have internal audit, we have audited many of our subscontractors, and I also helped some of them to carry out their internal audits, outside of my main activities, just to help them to better satisfy us...and my knowledge of ISO standards always helped me to successfully complete these activities...

    Sincerely,
     
  19. Eric Twiname

    Eric Twiname Well-Known Member

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    Fair enough...understand that my comments and experience are coming from 1-3 people size.

    Production: me and a temp hire assistant, possibly two.
    Sales: Me
    Purchasing: Me
    Finance: Me and the Bank rep.
    Accounting: Me and the accountant
    QA: me
    QC: me and the customer
    Legal compliance: Me and the lawyer
    QMS Management: me
    Facilities: Me and contractors when needed

    An audit does little good in this situation as stated prior.
     
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  20. Andy Nichols

    Andy Nichols Moderator Staff Member

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    Yes, in a company of 60! Try 6 or 16 and it begins to make less sense.
     

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