What is Audit.?

Audit 

Overview 

Auditing has emerged over the past years as a distinct specialty in most corporate programs. These auditing programs have been based mainly on technical examinations and on the internal auditing practices carried out by many large corporations. Depending on the industry concerned, each sector has developed its own special techniques and procedures that reflect the company's or industries objective and culture. Consequently a variety of practices exist but a few basic principles however remain common throughout the procedures.

Auditing is fast becoming an important management tool to help review and evaluate the status of a company's operating units. As it began to receive increasing attention within the private sector, legislators also soon got into the act.

WHY AUDIT?

The impacts for establishing an audit program can come from different people and can arise for a variety of reasons. Many programs have been motivated by the desire of the board of directors or chief executive officer to obtain an assurance and comfort that the company is in charge of and adequately handling its management responsibilities. On the other hand, programs have also developed from initiatives on the part of lower or middle management staff to improve their existing business processes and activities. Some audit programs have also been motivated by the occurrence of a processing problem or an incident.
In general audits are planned and conducted to

1. enable Top Management obtain assurance and comfort that the company is in charge of and adequately handling the management responsibilities,
2. improve existing business processes and activities,
3. improve moral within the organisation,
4. solve problems or incidents within the organisation,
5. determine how effectively the organisation is achieving its stated business and quality objectives.
6. gather information, analyse information upon which to make factual judgements,
7. identify where changes to business processes is required,
8. test the effectiveness and suitability of the management system in achieving the stated business and quality objectives of the organisation.

IMPACT ASSESSMENT AND AUDITING 

Impact assessment is an assessment of the compliance of planned activities, such as planning documents, programmes and projects, and may also include an assessment of compliance with environmental protection requirements and with the principles of sustainable development, with the aim of determining the optimum solution. 

On the other hand, environmental audit is the assessment of the compliance of environmental administration and performance of an operating business with environmental protection requirements, with sound environmental practice in general, and with the principles of sustainable development. Environmental auditing is mandatory only in cases stipulated by law. 

Audits are being used as a tool and an aid to test the effectiveness and suitability of the implemented management system to achieve the stated business, quality and/or environmental objectives of the company. An audit is a systematic, independent review and examination to check and verify whether the results of business processes and activities comply with the specified targets and objectives set by the company. An environmental audit also focuses on whether the methods used to achieve goals are effective. 

To be more precise the work of an audit is a study of the documents, processes, records and reports to see whether there are any deviations between specified requirements and the output results. This is done by interviewing key people in the organization, examination of the various processes and their documentation. 

During a typical audit, a team of qualified auditors, either internal or external personnel, conducts a comprehensive examination of a plant or other facility to determine whether it is complying with specified requirements and applicable statutory and regulations requirements pertaining to the industry. Using checklists and audit protocols, and relying on professional judgment and evaluations of site-specific conditions, the team systematically verifies compliance with applicable requirements. The team may also evaluate the effectiveness of systems in place to manage compliance and assess the risks factors associated with the organisation’s facilities and operations.   

DEALING WITH SURPRISES

Certainly, the overall goal of an effective integrated risk management plan is to prevent non-conformances or incidents from ever occurring. Even in spite of the best precautions taken, accidents do happen. In light of the possibilities, businesses must maintain a constant state of readiness for any safety and/or environmental emergency.

As businesses in all industries realize, managing business process liabilities is a challenge. While there is no fail-proof plan to meet the challenge, there has to be a commitment to a comprehensive approach. A commitment to taking a broad, integrated approach when managing risks, help improve the business process and protect employees and the environment.

DEFINITIONS OF AUDITING

“Auditing is a systematic, independent, and documented process for obtaining audit evidence and evaluating it, objectively to determine the extent to which agreed criteria are fulfilled”.

• Systematic : Programmatic (Planning → Implementation → Evaluation → Continual improvement.
• Independant : free from conflict of interest
• Documented : there are documents and forms used in the audit process, for example: from audit program, checklist, report etc.
• evidence : Recognized findings must be accompanied by evidence, for example: photos, serial numbers, sound recordings etc.
• Evaluating; One of the purposes of evaluating the audit no mismatch → Issuing NCR etc
• Criteria; Basis of appraisal of conformity in auditing → customer requirements, applicable regulation, Goverment Regulation, International Standards, etc.