ASQ CQA My pre-exam study note

1. My Reading on ASQ CQA The Handbook Part IV~(IVA-IVB) My Pre-exam Self Study Notes, 10%. 22nd September 2018~xx2nd September 2018 Charlie Chong/ Fion Zhang

2. Offshore Drilling Charlie Chong/ Fion Zhang

3. Offshore Drilling Charlie Chong/ Fion Zhang

4. The Magical Book of CQA Charlie Chong/ Fion Zhang

5. 闭门练功 Charlie Chong/ Fion Zhang

6. Charlie Chong/ Fion Zhang

7. Fion Zhang at Heilongjiang 22nd September 2018 Charlie Chong/ Fion Zhang

8. ASQ Mission: The American Society for Quality advances individual, organizational, and community excellence worldwide through learning, quality improvement, and knowledge exchange. Charlie Chong/ Fion Zhang

9. BOK Knowledge Percentage Score I. Auditing Fundamentals (30 Questions) II. Audit Process (60 Questions) III. Auditor Competencies (23 Questions) IV. Audit Program Management and Business Applications (15 Questions) V. Quality Tools and Techniques (22 Questions) 150 Questions 20% 40% 15.3% 10% 14.7% 100% https://asq.org/cert/resource/docs/cqa_bok.pdf Charlie Chong/ Fion Zhang

10. Part IV Audit Program Management and Business Applications [15 of the CQA Exam Questions or 10%] _______________________________________________ Chapter 16 Audit Program Management/Part IVA Chapter 17 Business and Financial Impact/Part IVB Part IV Charlie Chong/ Fion Zhang

11. Part IVA Chapter 16 Audit Program Management/Part IVA __________________________________________________ Auditing is an important program that must be well managed. Significant organization resources are used to conduct audits and to follow up on audit findings. Audit program managers should be competent and maintain high levels of integrity. Keywords: Audit program managers Charlie Chong/ Fion Zhang

12. 1. Senior Management Support Competent individuals who gather and handle all information pertaining to the audit program in an unbiased and ethical manner ensure a credible audit program. An audit group should be structured so that it does not report directly to the manager of the function being audited. For very small organizations, the audit program manager or auditor may report to the person he or she is expected to audit. The consequences of this type of conflict of interest should be discussed. For example, an auditor does not report a nonconformity that is related to his or her boss, but later a regulatory body or certification body reports the nonconformity or noncompliance, which results in economic consequences. Management must use the audit results appropriately to establish and maintain the credibility of the program. The misuse of audit results or failure to initiate corrective actions will erode the credibility of the audit program, regardless of the performance of the auditors. Part IVA1 Later, statutory or Third-Party audit performed and discovers the non-conformity Negative Economical Consequences Audit with findings and non- conformities N0 Audit report finding reported to the management Yes If desire, the consequences of this type of conflict of interest should be discussed with the management. Later, statutory or Third-Party audit performed and found the system satisfactory Positive Economical Consequences Charlie Chong/ Fion Zhang https://en.wikipedia.org/wiki/Genocide_of_Yazidis_by_ISIL

13. Flow Chart Meaning Part IVA1 Later, statutory or Third-Party audit performed and found non-conformities Negative Economical Consequences Audit with findings and non- conformities N0 Audit report finding reported to the management Yes If desire, the consequences of this type of conflict of interest should be discussed with the management. Later, statutory or Third-Party audit performed and found the system satisfactory Positive Economical Consequences Charlie Chong/ Fion Zhang

14. Flow Chart Meaning Part IVA1 Charlie Chong/ Fion Zhang

15. Management’s Role Support by top management helps the rest of the organization keep a positive attitude about the audit and its credibility. When management emphasizes the importance of the audit function and its usefulness to the organization, the attitude permeates the entire organization. If management fears or resents the intrusion of the auditing function, this attitude will likewise infiltrate the organization. An audit program set up to collect worthwhile information provides management with an oversight tool for:  Verification of ongoing system compliance to requirements;  Identification of continual improvement opportunities within the organizations audited;  Verification and measurement of effectiveness and efficiency . Management’s responses to audit results are also important. If data obtained improve the management system, the employees will see the benefits. This fact is especially true in an internal audit program, which helps a company identify its own weaknesses before customers or others do. On the other hand, if an auditor or management focuses on the people being audited rather than on the processes or systems, the value of the audit program can rapidly decline. Rarely is it one individual’s fault when there are many audit findings or when system implementation is poor. System structure and lack of management support are often the causes of such problems. Comments: Human Error (Part IID2) Reviewers should avoid the temptation to accept human error as a cause. Ask why it is human error. Perhaps the error is due to:  a complex process,  poor documentation,  inadequate training,  weak supervision, and  so on. Part IVA1 Charlie Chong/ Fion Zhang

16. Comments: Human Error (Part IID2) Reviewers should avoid the temptation to accept human error as a cause. Ask why it is human error. Perhaps the error is due to:  a complex process,  poor documentation,  inadequate training,  weak supervision, and  so on. Part IVA1 Charlie Chong/ Fion Zhang http://www.wastedpotatoes.com/subcategories/2016/funny_examples_of_human_error/human_error.htm

17. IVA1-Gossip While auditing a company I had visited many times in the past, I noticed coldness and an unwillingness to cooperate by many of the employees. I had found these same employees to be very friendly and cooperative during prior audits. Finally, someone confided to me that results from the previous audit I had performed provided a basis for employees’ performance appraisals. Although I tried to discuss the situation with the manager of that area, he insisted that performance appraisal was a proper use of audit results. Note:  One auditor’s reaction to this dilemma was to state in the audit report that this was an inappropriate use of the audit results, and that corrective action eliminating the practice of using audit results in employee performance appraisals was required.  In another case, the auditor declined future audit assignments in that particular department. Part IVA1 Charlie Chong/ Fion Zhang

18. IVA1-Gossip I inform top management that audit results are not to be used for performance appraisals. It is a penalty-free period of time to correct problems and improve performance. However, if the audit alerts management to unknown problems and managers decide to monitor that area more closely, then any new incidents are fair game for performance evaluations (but without reference to the prior audit results). If audit results become part of performance appraisals, the audit program will suffer. Part IVA1 Charlie Chong/ Fion Zhang

19. 2. Staffing And Resource Management Formalized Audit Program A group responsible for performing audits should have a documented, formalized program. The program that includes selecting and training auditors and monitoring their performance is robust. Some companies have a separate audit group to perform internal audits, reporting to either an audit manager or a functional manager responsible for quality, environmental, or safety programs. Other companies use part-time or subcontracted auditors. Sometimes an audit program coordinator or a functional manager recruits and trains individuals to perform audits part-time, in addition to their regular assignments. Either arrangement or a combination of both is workable as long as the auditors are well-qualified, technically competent people who know the audit system and can perform internal audits. Similar principles apply when staffing a second-party (supplier) audit group. Sometimes part-time auditors are used, other times full-time auditors are used, and sometimes internal auditors perform supplier audits. Second-party auditors need to be able to accommodate different organizational cultures and be able to travel. Part IVA2 Some companies have a separate audit group to perform internal audits, reporting to either an audit manager or a functional manager responsible for quality, environmental, or safety programs. Other companies use part-time or subcontracted auditors. Sometimes an audit program coordinator or a functional manager recruits and trains individuals to perform audits part-time Charlie Chong/ Fion Zhang

20. Second-Party Auditor Second-party auditors need to be able to accommodate different organizational cultures and be able to travel. Part IVA2 Charlie Chong/ Fion Zhang

21. Second-Party Auditor Second-party auditors need to be able to accommodate:  different organizational cultures and  be able to travel. Part IVA2 Charlie Chong/ Fion Zhang

22. Second-Party Auditor Second-party auditors need to be able to accommodate:  different organizational cultures and  be able to travel. Part IVA2 Charlie Chong/ Fion Zhang https://en.wikipedia.org/wiki/Christianity_in_Ethiopia

23. Second-Party Auditor Second-party auditors need to be able to accommodate:  different organizational cultures and  be able to travel. Part IVA2 Charlie Chong/ Fion Zhang

24. Second-Party Auditor Second-party auditors need to be able to accommodate:  different organizational cultures and  be able to travel. Part IVA2 Charlie Chong/ Fion Zhang

25. Auditor’s Role The use of unqualified auditors who possess little knowledge or who do not have the ability to assist management in making good decisions or improving a process can discredit the entire audit process. An auditor aims to keep the credibility of the audit function on a high plane. The auditor does this by looking at information objectively and avoiding ethical conflicts. An auditee must trust that an auditor will not divulge proprietary information to competitors or other outsiders who can use it to their benefit. Even internally, auditors must be careful to maintain confidences. This is especially true when the locations or departments report to different management (see ―5. Internal Audit Program Management‖). Part IIIE Charlie Chong/ Fion Zhang

26. Information Securities. An auditee must trust that an auditor will not divulge proprietary information to competitors or other outsiders who can use it to their benefit. Even internally, auditors must be careful to maintain confidences. This is especially true when the locations or departments report to different management (see ―5. Internal Audit Program Management‖). Part IIIE Charlie Chong/ Fion Zhang

27. Information Securities. An auditee must trust that an auditor will not divulge proprietary information to competitors or other outsiders who can use it to their benefit. Even internally, auditors must be careful to maintain confidences. This is especially true when the locations or departments report to different management (see ―5. Internal Audit Program Management‖). Part IIIE Charlie Chong/ Fion Zhang

28. IVA2-Gossip An external auditor relayed the experience of one company that designated the tool-room attendant as the internal auditor. This person reported directly to the president of the company. The person was knowledgeable about the processes but had no direct influence on the quality of the process. All the plant personnel knew the tool-room attendant. The company president asked the attendant to observe operations, interview operations and support personnel, and write up findings based on the observations. These observations went directly to the president of the company. Personnel responded well to the situation. Part IVA2 Charlie Chong/ Fion Zhang

29. IVA2-Gossip The justification for resources is based on the audit program schedule, which in turn should be based on internal organizational needs such As:  evaluating process changes and  external requirements such as those established by contract or regulation. The audit program manager should ensure that sufficient resources are available to conduct the quantity and types of audits required. If there are objections to the amount of resources needed, management should reassess organizational needs and external requirements. Part IVA2 Charlie Chong/ Fion Zhang

30. IVA2: Justification of Audit Resources The justification for resources is based on the audit program schedule, which in turn should be based on internal organizational needs such As:  evaluating process changes and  external requirements such as those established by contract or regulation.  others…….. The audit program manager should ensure that sufficient resources are available to conduct the quantity and types of audits required. If there are objections to the amount of resources needed, management should reassess organizational needs and external requirements. Part IVA2 Charlie Chong/ Fion Zhang

31. 3. Auditor Training And Development Training is one method of ensuring that auditors are competent. Auditors are trained either through the audit program directly or through a training organization. Once competency needs are determined, training may be employed to meet those needs. Training can be:  knowledge based or  skills based. Likewise, auditor competencies can be divided into knowledge and skill requirements. For example, in knowledge- based training, the auditor may be trained in regard to a standard, along with the requirements and their interpretation. For skills- based training, an auditor may be trained in interview and presentation techniques. An auditor must be knowledgeable in auditing skills, related standards and regulations, the general structure of management systems, auditing techniques, and other work-specific skills. Competence can be developed through the following methods:  Orientation on related standards;  Implementation procedures;  Training programs on subjects related to auditing;  On-the-job training. Auditors can maintain their technical competence through continuing education and current relevant auditing experience. Part IVA3 Charlie Chong/ Fion Zhang

32. Companies can offer an organization-wide certification program for all auditors, which includes training. Recognition and certificates identify those auditors who are approved according to the company’s standards. An auditor needs training in:  The standards to be applied;  Evidence gathering;  Interpersonal relations;  Report writing;  Interview techniques;  The ASQ CQA BoK;  Improvement tools and techniques (?);  Auditing methodology. Auditors should be trained to use checklists for audit observations, to make notes that will be used by audit teams, and to gather evidence. At least one team member should be familiar with the department operation or the scope of audited activities. A lead auditor usually has more experience, may be more highly trained in the applicable audit standards, and may have more training in conducting audits. Policies and procedures defining the qualifications for lead auditors often require a certain number of years of experience or performance of a specific number of audits before promotion to this level. Auditors should be requalified at planned intervals. Continuing their training helps auditors maintain skills and knowledge. Training may include a refresher course periodically. The refresher course, coupled with experience in performing audits, is a reasonable expectation. Such requirements help auditors keep up with changes in standards and auditing techniques. Part IVA3 Charlie Chong/ Fion Zhang

33. Ongoing Qualification- Continuing Education The field of auditing changes as standards change and more effective auditing techniques surface. Auditors must strive to keep abreast of changes and trends, and they must embrace current technology to avoid becoming liabilities rather than assets. Committed professionals can increase their knowledge and improve their skills through continuing education. The following are continuing-education resources:  Reading technical literature (auditing-related books, newsletters, and periodicals);  Reading case studies;  Reading research papers;  Attending seminars and classes (or e-learning webinars and web-based training);  Participating in professional organizations;  Consulting with peers;  Attending professional conferences such as the ASQ Audit Division annual conference. More training organizations, colleges, and universities are providing network courses over the internet. This technology provides easy access to courses for individuals in remote locations. Near-real-time communications can be arranged. Part IVA3 Charlie Chong/ Fion Zhang

34. Continual Education Many continuing- education opportunities are available through ASQ. The Audit Division offers annual tutorials to reflect current events and trends in auditing, and holds an audit conference to expand auditors’ knowledge in auditing and related fields. Many other organizations offer correspondence courses in standards and management systems. Continuing education may consist of attending conferences or taking formal courses. Books and magazines are also available to expand an auditor’s knowledge. ASQ also offers e-learning classes, which do not require travel and being away from home. These classes are prescreened and approved. Before paying for an e-learning class, determine whether the class is simply taking online tests, which authority would be granting the continuing education units, and whether the class is asynchronous (online, 24 hours a day) or more like a correspondence course using e-mail technology. For some e-learning classes, students are given books to read and then asked to go online to take a test to determine their knowledge of the material. Other e- learning products consist of a series of lessons, illustrations, diagrams, interactive exercises, graded assignments and tests, quizzes, and a desk reference or book. Part IVA3 Charlie Chong/ Fion Zhang

35. ASQ CQA Recertification. ASQ requires an auditor who has passed the CQA examination and has been certified by ASQ to recertify within three years. This can be accomplished by earning recertification units (points) REU or retaking and passing an examination. An auditor must collect a specified number of points in a three-year period to remain certified. Points accumulate by attending regular ASQ section meetings. Points are also awarded for:  Completing additional course work;  Being employed in the field;  Writing about topics included in the BoK;  Attending or leading seminars or training sessions;  Teaching a class about topics included in the BoK. Recertification encourages auditors to remain in touch with the audit curriculum and maintain a professional level of expertise. Some companies have additional training and qualification requirements for members of their internal audit functions. Other Skills. Auditors may benefit from staying abreast of technology outside the field of auditing, as specified in the CQA’s BoK. For example, auditors may take courses in leadership, project management, or computer training. They may brush up on their facilitation and presentation skills, public-speaking techniques, and time-management techniques. All enhance an auditor’s performance and professionalism. Part IVA3 Charlie Chong/ Fion Zhang

36. An informal type of internal continuing education is forming discussion groups at meetings or training sessions. Another type of continuing education is to hold auditor debriefings (question (someone, typically a soldier or spy) about a completed mission or undertaking.) after an audit to learn from what took place and to better prepare for the next assignment. Group interactions can play a vital role in ensuring that auditors follow unified policies and perform similarly. Auditor discussion groups can review unusual situations, findings, or problems encountered during an audit. Such discussion promotes:  Team spirit within a department;  Open communication;  Uniformity of auditing practices. Any specific discussion about an auditee must be kept confidential. Release of confidential information without proper permission is unethical and compromises a department’s integrity. Auditing is not a stagnant process; it is a continuous learning experience. The auditor should aim to:  Stay current with product and processes;  Conform to changes in general auditing standards;  Meet the ever-changing needs of management. Part IVA3 Charlie Chong/ Fion Zhang

37. Learn from The Experts- eLearning Part IVA3 Identify you areas of weakness and view 5 YouTube videos pertaining to the subjects. https://www.bing.com/videos/search?q=iso+9001&FORM=HDRSC3 Charlie Chong/ Fion Zhang https://www.youtube.com/results?search_query=%23AskBestPractice

38. International Auditing As auditing has become increasingly global, many auditors are finding the ability to speak a second language essential. The auditor should be able to use tactics that ease cultural differences, such as:  Employing an interpreter to facilitate an audit;  Familiarizing himself or herself with cultural differences that could affect relations with the auditee;  Preventing serious misunderstandings by becoming acquainted with local customs. These tactics avoid cultural differences that could interfere with the audit process. Part IVA3 Charlie Chong/ Fion Zhang

39. Auditor Performance. The evaluation of auditors occurs at the following stages: 1. The initial evaluation of persons who wish to become auditors; 2. The evaluation of the auditors as part of the audit team selection process; 3. The continual evaluation of auditor performance to identify needs for maintenance and improvement of knowledge and skills. Part IVA3 Charlie Chong/ Fion Zhang

40. The evaluation of auditors/ Auditing as PDCA. The evaluation of auditors occurs at the following stages: 1. The initial evaluation of persons who wish to become auditors; 2. The evaluation of the auditors as part of the audit team selection process; 3. The continual evaluation of auditor performance to identify needs for maintenance and improvement of knowledge and skills. Part IVA3 The evaluation of the auditors as part of the audit team selection. http://isoconsultantpune.com/iso-90012015-internal-audit-by-pretesh-biswas-apb-consultant/ Charlie Chong/ Fion Zhang

41. Effective Performance Evaluation Three steps could be used for an effective performance evaluation:  Step 1: Communicate expectations. A meaningful performance evaluation is one that measures performance against clearly defined standards. Audit management must provide a consistent explanation of these standards during the initial training session. Proper training provides auditors with day-to-day performance expectations as well as insight into the basis for performance evaluation.  Step 2: Evaluate the auditor’s performance. Performance evaluation should assess the competency of individual auditors, as well as the consistency between them, against established standards. As mentioned earlier, audit management measures performance by: • Observing auditor performance during an audit; • Reviewing auditor evaluations completed by auditees (audit service customer); • Reviewing audit deliverables; • Employing an independent auditor to evaluate auditor techniques; • Appraising general auditor credentials.  Step 3: Communicate the auditor’s performance. Audit management should report performance evaluation results to the auditor. To improve performance, an auditor must understand his or her strengths and weaknesses. Audit management should review evaluation results with the auditor so they can work together on a plan to improve performance. This completes the evaluation loop. The performance evaluation provides a monitoring function for competency. The evaluation provides feedback for improving the auditor selection process Part IVA3 Charlie Chong/ Fion Zhang

42. Part IVA3 Who Audits the Auditors? Under Oklahoma state law and the Institute of Internal Auditors International Standards for the Professional Practice of Internal Auditing, Internal Audit must have a periodic external assessment conducted by a qualified, independent assessor or assessment team from outside the organization. The assessment must confirm conformance of the department with the definition of Internal Auditing, the Code of Ethics and the Standards of the Institute of Internal Auditors ('IIA'). Internal Audit has had regular external assessments, the latest conducted in October 2014 by the professional firm RubinBrown, all of which have confirmed Internal Audit's conformance with the IIA requirements. In addition, we have established an internal Quality Assurance and Improvement Program for measuring performance, ensuring quality, and monitoring for continued improvement. The program is designed to provide reasonable assurance to the Board of Regents and university management that Internal Audit: Complies with the definition of Internal Auditing, the Code of Ethics and the Standards of the IIA, Operates in an effective and efficient manner, Adds value and improves the organization's internal controls. http://www.ou.edu/audit/about-us/who-audits-the-auditor Charlie Chong/ Fion Zhang http://www.iia.org.au/sf_docs/default-source/quality/quality-article---who-audits-the-auditor.pdf?sfvrsn=2

43. Part IVA3 Who audits the Auditor? Charlie Chong/ Fion Zhang http://www.iia.org.au/sf_docs/default-source/quality/quality-article---who-audits-the-auditor.pdf?sfvrsn=2

44. Part IVA3 http://www.chinadaily.com.cn/world/2015xivisituk/2015-10/23/content_22261317.htm Charlie Chong/ Fion Zhang

45. Auditing the Audit Department. Many people ask: ―Who audits the auditor?‖ Internal Audit examines many parts of the organization, so it is only natural the quality of Internal Audit itself should be reviewed from time to time. Internal Audit is covered by the International Professional Practices Framework issued by the Institute of Internal Auditors globally. This includes mandatory guidance for Internal Audit:  Definition of internal auditing.  Code of Ethics  The International Standards for the Professional Practice of Internal Auditing (Standards). Part IVA3 Internal Audit Department http://www.iia.org.au/sf_docs/default-source/quality/quality-article---who-audits-the-auditor.pdf?sfvrsn=2 Charlie Chong/ Fion Zhang

46. 4. Audit Program Evaluation. Periodic evaluations of all audit programs and audit teams can uncover improvement opportunities. Audit programs are evaluated through periodic management reviews. Management can review records, analyze performance, or appoint an independent team or individual to review audit results. In the case of a company with multiple locations, auditors from another location can come in annually to audit the audit team. This evaluation could include:  Observing audit teams perform an audit  Examining auditor training records and audit schedules  Looking at sample audit results, corrective actions, and follow- up activities to see if the program is working as intended Auditee Feedbacks. Additional data can be collected by asking an auditee to rate audit team members in the following areas: • Interviewing skills • Interaction with personnel • Reporting results Critical Reviews. Critical reviews by peers, subordinates, and superiors provide exceptional opportunity for growth and maturity. While the reviews may be slightly unpleasant to those being assessed, they also help keep things in perspective. Management should treat the audit function the same as other organizational functions and departments. Effective measures of an audit program include audit service performance, auditor performance, and value-added contributions (Figure 16.1). Measures are effective only to the extent that they meet the audit program’s needs. An audit program must select its measures based on documented standards and objectives. In addition, it must use data collected over time to accurately reflect ongoing program performance. Part IVA4 Charlie Chong/ Fion Zhang

47. Figure 16.1 Audit program measures. Management should treat the audit function the same as other organizational functions and departments. Effective measures of an audit program include audit service performance, auditor performance, and value-added contributions Part IVA4 Measures Audit service performance Auditor performance Value-added contributions Charlie Chong/ Fion Zhang

48. Quality Management as Organization Functions and Department. Management should treat the audit function the same as other organizational functions and departments. Part IVA4 Management should treat the audit function the same as other organizational functions and departments. Effective measures of an audit program include audit service performance, auditor performance, and value-added contributions Charlie Chong/ Fion Zhang

49. Audit Service Performance. Audit service performance determines whether the audit program meets audit service customer expectations. Sources of input data for managing the audit program may include:  Performance evaluations from audit service customers (Client?);  Focus groups to gather direct audit service customer feedback;  Audit-related loss of customer time, resources, or both;  Contract term fulfillment (contracted audit organization?);  Audit program deliverables, including audit reports;  An independent auditor to audit the audit program;  The number and severity of external audits performed on the audit organization. (not the auditee organization performed by the audit organization.) Question? What is ―Audit Service‖? See PartIVA5- ―The audit program manager has several types of audit services that can be scheduled to meet organization needs. There are product, process, and system audits.” Part IVA4 Charlie Chong/ Fion Zhang

50. Auditor Performance Auditor performance assesses the competency of individual auditors as well as consistency among team members. To apply the measurement, management could:  Observe auditor performance during an audit  Review customer performance evaluations  Review audit deliverables  Appraise general auditor credentials Comments: Auditor performance evaluation could be performed at two level:  within the audit organization by the audit program manager or by the Client;  appoint an independent team or individual to reviews as part of audit program evaluation. The above apply to second selection in this discussion. Part IVA4 Charlie Chong/ Fion Zhang