The Case for Outsourcing your Internal audits
Tim Keane
Traditionally, organisations have resourced their internal audits for Quality, Safety & Environmental systems by taking the words in the standard literally. Internal staff are (usually) sent off to training courses to find out how to conduct audits. Then they are deployed to the task upon their return.
This approach has some strengths. The staff know the organisation well. Provided they are given adequate time to do the job, they can be quite effective. However, there can be limitations. Good auditors are often good because they are very effective people in the organisation. They are busy people. To appreciate the management implications of the systems they audit, they have to work at that level. Let's be frank - they often just don't have the time!
Usually internal auditors fulfil this role on a part-time basis. Yet organisations suffer increasingly stringent demands on their management systems. They are constantly challenged to do things faster, better and at lower cost. Part time employee auditors can be equally challenged to audit thoroughly enough, to properly ensure risks are properly identified and controlled, satisfy external auditors and provide meaningful information to management.
Under these conditions, audits can be a diversion from the real business of the company.
Maintaining the audit program can incur significant costs. There is the initial cost of training a team of auditors. This cost recurs: as people move on to new positions where they no longer undertake audits, more auditors need to be trained. Then there is the cost of your auditors actually planning, undertaking and reporting the audits – when they can find the time and priority amongst their other duties. (See cost comparison example below.)
No matter what management system is in place, the activity and resources needed to run the internal audit system can become a real burden.
Consequently, we often find that there is a feeling that despite all of the audits that are done, the management systems are really not up to scratch, the audit program is in a rut, or there is just a feeling that somehow audits ought to be working better than they are.
For many, outsourcing the audit program to a professional auditor to carry out the internal management system audits can offer a good solution. They can realise a reduction in resources and costs, as well as increase the management value of the audits. This offers a compelling value solution in the right circumstances.
Professional auditors are usually far more qualified in the theory and skills of auditing, and most are required to demonstrate continuing development related to their auditing. This training gives them a very thorough understanding of the management system standard in which they specialise as well as knowledge of the certification body requirements and interpretations. (At Quality Award Partners® our auditors also conduct certification audits to ensure they are challenged to work at the necessarily high levels that certification audits demand.)
Any professional auditor you appoint will have, or quickly acquire, a sound working knowledge of your industry. This reduces the learning curve to get to know your business from the inside. Typically they will also have some experience and expertise from other industries which they can bring to benefit your organisation.
Experience is perhaps the most important aspect they will bring to your management system through your internal audits. They should have plenty of knowledge of management systems in other organisations, both in your field and in others, and will have done extensive audits of these systems. They can then use this experience to guide you to improved control of risks and more efficient ways of doing things which may not have been noticeable to your own internal auditors.
Through this experience the professional auditor will audit more efficiently (in less time) and to a greater depth within your systems. This will increase year-on-year. This translates into real savings, and we consistently realise productivity improvements that can halve the cost in only a couple of years.
Management like the professional reports. They receive insightful information from a management perspective, that enables them to strengthen the systems in areas that really matter, and enable them to exercise informed due diligence.
Finally, an auditor from outside your organisation will be free of internal political and cultural constraints. They will be able to audit at any level with confidence and skill. And as true professionals, they will be able to express even the most delicate issues appropriately. They can be truly objective - which is what the standards actually require!
Can outsourcing your internal program strengthen your business?
More information?
Find out how your management system should be the basis of risk management
Find out how Quality Award Partners® can support your audit program
The real costs might surprise you!
Example - Manufacturing organisation of 100 employees
| Item | Internal |
|---|---|
| Audit days per year | 6 |
| No of auditors per audit | 1.5 |
| Direct cost per day | $300 |
| Contribution per day | $80 |
| No of auditors in pool | 6 |
| Training cost per auditor | $750 |
| Total average cost per year | $6440 |
Outsourcing your audits can deliver immediate cost benefits of 16%, increasing to almost 50% over only 2 years!
Assumptions:
- It normally takes significantly longer for internal people to audit the system than it does for Professional auditors;
- Often more than one auditor is tied up conducting audits.
- Add to this the real hidden cost of foregone contribution, and the costs start to mount!
- And then there is the training cost, both directly at about $750 per person, and including the salary and contribution expenses.
- Most companies find that they need to replace their full auditor team each 3 years or so.
- When these costs are identified and calculated, outsourcing to specialists who can work with you on a long term basis can make sound financial sense.