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Continuous Improvement of Business Audits

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  • Continuous Improvement of Business Audits

    An effective audit process will mean that audit teams will be taking a systematic approach to gathering and interpreting data and information. In order to maximize the value of the outcomes of the audits, the management should: Accept that the audit activity needs appropriate resourcing, including training of auditors, education of operational and management staff, and physical and financial funding. If any of these are inadequate, then the quality of outcomes will suffer. Accept that there will be limitations to the data gathered and the outcomes produced, not least because of the influence of the quality and quantity of resources allocated to the audit activity, but also because of the varying standards of judgment and interpretation that may be applied to the outcomes; Focus on trends, take appropriate corrective action on specific issues, but look for trends and patterns that indicate underlying, hidden, problems that need addressing; Ensure that the auditing activity is flexible and adaptable, in order to make it compatible with the culture and structure of the organization, rather than adopt a rigid, unchanging process which is likely to be inappropriate and producing inaccurate results; Challenge the findings, the audit process will not be infallible, and should be challenged continuously to ensure that it is, itself, performing effectively; Apply the highest possible standards to the interpretation of results and judgment on what action to take, this requires training, experience, expertise, awareness of the internal and external environment, and an awareness of the impact of proposed changes on the motivation and morale levels of staff and managers, and an ability to forecast the impact on the operational and strategic objectives.

  • #2
    The Audit Committee of the Board meets with the company

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    • #3
      However, there are some dangers that must be avoided in order to maximize the effect of the audits. These include Overload of data and information, the result either or too many audits being scheduled in general and-or the unnecessary auditing of areas of activity that are obviously performing well. This can be avoided by targeting the audits and schedules more thoughtfully; Overload of improvement recommendations, not in itself a danger, but the professional servicing organization can find it impossible to resource, in terms of budget, time, or human resources - all the improvements identified. The answer is to prioritize, focusing on those improvements that will bring the greatest value to the achieving of the organization's objectives; Complacency, where results are apparently positive in most areas, there is a danger that management will become complacent. By adopting the kaizen continuous improvement approach to auditing, this should be avoided; Over-reliance on the auditing process, by leaving the identification and correction of poor performance to the audit process, rather than the audit process at least in part confirming that positive, continuous improvement activity is taking place; Managers ignoring the relevance of audit findings the most damaging response. If managers do not take the audit results and recommendations seriously and refuse to implement, or only half-heartedly implement the required changes, then the value of the audit process is wasted.

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      • #4
        Although the auditing should be scheduled to examine all processes and activity on a regular basis, there is a need for additional emphasis to be given to auditing poor performers. These are activities, processes, functions, systems, where problems are visible of suspected, but the causes are not certain and need further investigation. In these cases, management should arrange for ad hoc audits, and-or for these areas to be given priority in current or imminent auditing activity. It is not acceptable to rely on a generic auditing approach. Not dealing with visible or suspected poor performers immediately will allow poor performance to cause immediate and possibly long-term damage. Inevitably, the longer the problems remain unaddressed, the more difficult it will be to take corrective action.

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        • #5
          There is a danger that management will see only the audit results and concentrate on the decision making as to what improvements to make, and how to implement these. However, management must remember that the audit results are drawn from the activities of people. This means employees, operational staff, managers, specialists, suppliers, customers, stakeholders. Feedback, shaped and delivered in an appropriate manner, depending on the target group, must be seen as an essential element of effective auditing and successful implementation of changes. Not informing people of the rationale, the purpose, the results, and the positive contribution made by auditing will lead to low morale and motivation, dissatisfaction, and possibly conflict.

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