How to Improve Your Quality Management With Internal Audits
Internal audits are vital for companies that manufacture consumer electronics, medical devices, biotechnology, and other industries that develop highly complex products. Audit results provide management with the information necessary to better attain operational efficiency by identifying quality problems and correcting issues before they are discovered in an external audit.
An audit provides an independent, informal, and impartial analysis using a structured approach to determine where your company is performing well and areas that need improvement. An audit can help you detect violations of laws, regulations, and provisions of contracts and agreements. Your team can solve concerns before they become problems by knowing what they are and where they are.
Strategic, well-planned audits can help you focus on your business—developing innovative quality products, creating a collaborative supply chain, driving company growth, and meeting customer demand.
In this article, we dig deeper into why you should conduct internal audits and understand how to avoid compliance issues, broken processes, workforce attrition, or slow workflows.
WHY INTERNAL AUDITS MATTER
Customers buy from companies and brands they trust
Building complex products is the work of many teams comprised of various business disciplines. A product can go through numerous iterations before it’s ready for market—and sometimes it’s a small adjustment to a long-standing process that can save time or money.
Those small changes can add up to business success. That’s why smart companies with reputable brands take a holistic approach to achieving and maintaining product quality—they conduct internal audits as part of their quality management strategy by following compliance regulations before they become issues.
The latest analytics demonstrate that 81% of consumers say brand trust is a deciding factor when making a purchase. And 46% of consumers are willing to pay more for a brand they trust. 1
Why do an internal audit?
Engineering and manufacturing companies face a staggering amount of disruption, daily challenges, supply chain issues, and competition. Audits can be an essential component of a manufacturer’s quality strategy because they can spot possible problems, put remedial measures in place, and work toward continuous improvement.
An audit provides upper management with an alternative perspective of priority areas or areas that may not be reviewed in an external audit but are important. Addressing these areas now with a strategic plan can deliver value through digital innovation, growth, and success.
Challenges in internal auditing
While the benefits are numerous, internal auditing isn’t without challenges such as:
- Resistance from employees who might view audits as scrutiny or criticism, leading to workplace opposition
- Maintaining objectivity
- Ensuring that the auditing team remains unbiased, especially in smaller organizations
Tips for effective internal auditing
- Foster a positive audit culture
- Use your QMS to provide data and information
- Promote audits as controls for improvement rather than tools for criticism
- Provide training
- Equip your audit team with the necessary skills and knowledge to conduct effective evaluations
- Use standardized checklists to ensure consistency; use checklists that align with industry standards and organizational objectives
- Consider engaging external expertise
- If objectivity is a concern, consider bringing in third-party auditors for a fresh perspective
Internal versus external audits
A key distinction between compliance audits (often known as third-party or external audits), and internal audits is—who does the audit. Internal audits are performed by internal auditors who work for your company. For external audits, you’ll work with certified outside auditors.
|Internal Audits||External Audits|
|Objective||The objective of an internal audit is to educate management and employees about how they can improve business operations and efficiency.||The objective of an external audit is an examination of a particular product or service such as hardware, processed material or software, or medical devices to evaluate whether it conforms to requirements (i.e., specifications, performance standards, and customer requirements).|
|Owed Responsibility||An auditor is an appointed trusted employee charged with advising upper management on how to best manage the company’s processes, quality documentation, goals, and technology platforms.||External auditors have no responsibility to the company other than determining the accuracy of the audit.|
|Reports to||An internal auditor reports to those teams within the company.||An external auditor reports to shareholders who are outside the governing structure of the company.|
Internal audits yield vital information that can help you:
- Ensure compliance verification
- Enhance business operations and reduce errors
- Improve efficiencies
- Get better control of risk management processes—improve vulnerabilities
- Improve workflows
- Decrease costs, improve cost recovery, and increase profits
- Correct any processes not performing well
- Keep employees alert about responsibilities to improve their efficiency
- Explore potential risks
- Increase stakeholder confidence
An audit can exploit your strengths or weaknesses:
- Supply chain uncertainties
- Recruitment and retention issues
- Adaptation to your hybrid working environment
- Addressing the impact of inflation
- Navigating geopolitical uncertainties
- Technology and data analytics
- Preparedness for unscheduled audits
- Environmental Social and Governance (ESG) reporting
- Cybersecurity and data privacy
- Digital disruption and new technologies
6 STEPS TO PLANNING AN INTERNAL AUDIT
Internal audit teams have the unique opportunity to re-envision the impact they can make for the company by restructuring their approach, so it aligns with current business practices and industry trends.
Some areas to consider before you start:
1. Who Conducts the Audit?
A key first step in determining the audit is—who is going to conduct it—your Regulatory or Quality teams or a hybrid? After making that determination, you’re ready to start the planning process.
What are the team responsibilities? Define roles:
- Implement and execute the audit procedures
- Establish an understanding of the role each team will play (e.g., host, scribe, record/document prep)
The role of an internal auditor is to:
- Conduct interviews
- Inspect evidence
- Test controls
- Read policies to understand the environment.
- Validate that controls and processes are working well
The internal audit team reviews any standards, frameworks, and regulatory requirements relevant to the project or program. Validate that records are up to date and readily accessible as needed such as:
- Product and facility, registrations, licenses, DoCs and certificates
- Submission records (particularly, regulatory impact assessments and letters to file)
- Quality Agreement for outsourced services (internal and external)
2. Create Direct, Fact-Finding Oriented Questions
- What goals do you want to accomplish?
- How does the process support the company in achieving its goals and objectives?
- What risk(s) does the audit address?
- What processes were audited in the past and, if so, what were the results of the previous audit(s)?
- Were audit findings or nonconformities investigated and remediated according to the action plan?
- Have there been significant changes in the process recently or since the previous audit?
- What is the scope of the project, and what specific requirements need to be met for a successful outcome?
- Pick the ideas that will drive immediate impact with limited or no additional budget
3. Preparing Your Strategy
- Construct your daily operations–which areas or departments will be evaluated and inspected
- Shift from a one-size-fits-all approach to diversifying the nature of audit activities, including issues-based reviews or audit workshops
- This is the time to review any previous audits and understand the results
4. Conducting the Audit
- Collect all relevant documented information that relates to the process you’ll be auditing such as metrics, work instructions, charts, diagrams, process maps, workflow charts, and control plans.
- Prepare a checklist of basic audit questions such as: What are your responsibilities? How are your records maintained?
5. Reporting the Findings
- Conduct meeting(s) with the process owner(s) to discuss findings such as weaknesses to be addressed or areas improved
- Discuss the positive and potential improvement areas so the process owner will get better value from the audit.
- Continuously monitor enhancements or changes
- Include a summary of the findings and recommendations for improvements in your report, corrective actions, and next steps
- Manage monitoring processes, replacing legacy systems, employee training, and fine-tuning processes or workflows
6. Communicating Results to Upper Management
- Communicate to upper management audit results and recommendations.
- The audit team can schedule breakout sessions with audited teams to address resolution.
QUALITY MANAGEMENT SYSTEM SOLUTIONS ARE VITAL TO YOUR QUALITY PROCESSES
The importance of a QMS when conducting an internal audit
Companies that have invested heavily in quality combine the practice of internal audit using data and information from their quality management system (QMS) solution. A QMS provides a formalized business system for documenting policies, processes, responsibilities, and procedures to meet customer requirements and regulatory standards in one single solution. Companies of all sizes rely on a QMS solution to manage their QMS processes and support compliance with FDA, ISO, European, and other international regulations.
Conducting an internal audit with your QMS to check your company’s readiness is powerful. An audit lets you evaluate your operations, internal controls, and risk management processes—anytime—so you can be prepared for any third-party or unscheduled audits. You don’t have to keep auditors waiting while you search books, file cabinets, or people’s desks for documentation and records. Everything is contained in one centralized location, providing
easy access to your:
- Quality documents, such as your quality plan
- Device master record (DMR)
- Bill of materials (BOMs)
- Org charts
- Past audit results
- Training records
- Purchasing and supply chain
- Approved vendors
Arena cloud-native QMS helps you manage quality in an easy-to-use solution
If you’re still tethered to spreadsheets, you probably realize you are missing important goals and deadlines. Even following compliance regulations has become more than challenging. Conducting internal audits can only take you so far without the right solutions to get you to market faster. That’s why so many companies have turned to Arena’s cloud-native QMS. It helps them get their business back on track fast because of its ease of adoption and scalability without the need for expensive IT infrastructure.
Arena QMS helps your company ensure quality management system compliance with FDA, ISO, and AS 9100 regulations, as well as respond to customer demands with a product-centric approach to quality. Real-time collaboration is enhanced with cloud-native solutions that enable dispersed product teams to communicate throughout the entire product development process. With an intelligent BOM management solution, all teams, contract manufacturers (CMs), and tiers of the global supply chain can easily access information and collaborate anytime and anywhere throughout the entire product lifecycle—increasing visibility and traceability.
This helps to accelerate new product development (NPD) and new product introduction (NPI) by streamlining processes, automating review cycles, and reducing errors to increase profitability.
“Think about Arena as the total package. Everything’s connected—your engineering, manufacturing, and quality teams. You’re ready to take your product from inception all the way through to life span,” said Christine Pompa, Customer Success Coach with Arena.
Pick up some great inside tips on audit readiness and listen to Christine and Rimsys experts discuss Quality and Regulatory Alignment for Audit Readiness in this informative webinar.
Capitalize on your strengths and weaknesses
The goal of your next internal audit should be to improve the impact and value it offers by coordinating your QMS results with your company’s goals and business objectives while delivering quality products that meet customer demand.