Conducting regular audits can help the line managers identify problems as well as areas of improvement for efficiency, quality, accuracy, speed, compliance & safety. The heart of any operational audit is the checklist, which determines the effectiveness of the audit in unearthing the gaps & opportunities.
A checklist can be a simple yet powerful tool that can be used to stay focused and ensure the entire scope of the audit is covered. A superficial & high level checklist just looks at the tip of the iceberg and address the problems that have already surfaced. The real purpose of the operational audits is to proactively identify and nip the problems in the bud, before these start harming the business.
So, how do we design a checklist that not only digs deeper but also provides a 360 degree view of the operations. Preparing audit checklist and the rating criteria are very important part of the audit preparation.
Tips for Smart Audit Checklists:
- Align with the objectives and the scope of the audit: For example, the objective could be either identify the root cause of certain pain points or ensuring compliance to a standard. The checklist should accordingly cover those questions or points that are relevant for the audit as well as cover the entire scope.
- Apply PPT framework: PPT (Processes, People & Technology) are the key drivers of operational effectiveness. Each aspect of the audit should be evaluated from all the 3 angles of PPT. For example, the check point related to batch control in the warehouse should cover
- Process of batch-wise storage including checks & controls
- IT system to record the batch-level inventory
- Training people on batch control procedures
- Map checklist to the detailed activities and the process outcomes: In order to unearth the hidden issues, the checklist should mirror the activities and their impact on the outcomes of the processes. It ensures that all critical check points are included in checklist.
- Refer to appropriate standards or documents: The sources of information for the checklist could be:
- ISO standards
- Internal controls document
- Risk assessment document
- Previous audit observations
- Key pain points & reported issues
- Keep the check points manageable: A very long list of questions could dilute the focus from the core areas. Also, a long checklist may consume lot of time without adding much incremental value. Also the questions must be categorized under logical categories, so that results could be analyzed at the category or sub-category levels and not just an overall rating.
- Sequence the questions in logical order: If you are auditing a large site, such as a manufacturing site or a warehouse site then the questions should be sequenced in the order of logical physical movement of the auditor. Otherwise, the auditor may end up wasting time in back & forth movement. For example, for a warehouse all the questions related to the security area should come together followed by the parking areas & so forth.
- Review checklists periodically: The checklists should keep changing with the changes in the process, technology, reported issues & the risk profile. A process of periodically reviewing the checklist helps to ensure that it remain relevant and up to date. New questions may be added, and existing questions may be removed. A technology driven "intelligent" checklist reduces dependence on the experts.
In a nutshell, a well thought off and prepared checklist minimizes the risk of surprises and helps to identify the opportunities for improvement. So, have you reviewed your audit checklist?