Transcript Introduction

CBT 2 - Auditing Techniques
1
Course Format
Course is made up of this PowerPoint presentation
and accompanied by the small questionnaire next
to you!
Advance through the slideshow as you need by
hitting the “ENTER” key on your keyboard!
You should be able to complete within 2 hours
1.
2.
3.
4.
Introduction to Auditing (slide 4)
Preparation of an Audit (slide 21)
The Audit Process (slide 35)
The Human Element (slide 58)
2
Check on yourself
Please read the questionnaire and answer the questions to
your best knowledge without consulting this presentation
or an instructor.
Be fair to yourself!
Complete it (not more than 8-10 minutes), turn it around
and continue here.
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Part 1 - Introduction to Auditing
At the end of this session, you will:

have been introduced to the concepts of auditing;

be able to recognise the different types of audit;

be able to understand the objectives of auditing;

be able to understand some of the terminology used;

be familiar with ISM certification and auditing
requirements.
4
What is an Audit?
A systematic and independent examination to
determine: -
 whether safety/quality activities comply with
planned arrangements;
 whether these arrangements are implemented
effectively; and
 are these arrangements suitable to meet the
company’s objectives.
5
Alternatively,
an audit can be thought of as a
thorough examination of the
company’s safety or quality
management system!
6
What’s in the mind of the Auditor?
“is the management system really resulting in the
company operating safe ships and providing a
quality service to their customers?”
or to put it another way;
“are the company’s operations safe and healthy?”
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Purpose of the Audit
To compare actual work practices
with the written instructions of the
company
Any difference between the two is
noted as an Audit Finding or
Non Conformity
Audit deficiencies must be
corrected with a view to
continuous improvement.
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a) - Internal Audit - “Us on Us”
An audit carried out by a company to
evaluate it’s own performance.
A person independent of the area being
audited should carry out such audits.
Sometimes called “First Party Audits”.
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b) - External Audit - “Us on Them”
An audit carried out by our company to evaluate
the activities of our contractors, suppliers and
agents, etc.
i.e. Shipmanager auditing Manning Agent or,
Manning Agent auditing Travel Agent.
Sometimes called “Second Party Audits”.
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c) - External Audit - “Them on US”
An audit carried out by a principal on our
company/ship.
i.e. Shipmanager by Shipowner, or
Manning Agent by Shipmanager.
Also referred to as a “Second Party Audit”.
11
Third Party Audit - “Them on Us”
An audit carried out by an organisation’s
regulatory body, class society or other
certifying body.
Performed in order to issue or maintain a
certificate of recognition or proof that the
company’s safety / quality management
system meets stipulated and / or contractual
requirements.
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Objectives of a 3rd Party Audit

To maintain recognised certification for the
safety/quality management system (e.g. DOC audit)

To obtain proof that the company maintains their
quality and safety standards all time (e.g. owners
audit).
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Depth of an Audit
A term used to explain how
thoroughly the auditors will
examine the system being
audited.
A system audit is usually a
superficial or shallow audit used
to get the feel of a safety/
quality system, whereas an
adherence or compliance audit
is a full in-depth look.
14
Scope of an Audit
Refers to the amount of the
safety/quality system that
should be reviewed in order
to confirm that activities are
in compliance with company
instructions.
This means that individual
sections of the SMS can be
audited onboard ship at
different times, thereby
reducing the workload on
the auditor, and ship’s staff.
15
Maintaining Independence
It is a requirement in both safety and quality
management, that wherever possible, auditors
must be independent of the area being audited.
In all cases, an auditor must be properly trained
in auditing techniques and knowledgeable in
the area(s) that they are auditing.
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ISM Certification Requirements
Under the ISM Code, the shipmanagement
company is required to obtain a Document of
Compliance (DOC) which is valid for 5 years;
Each ship under their management is
required to obtain a Safety Management
Certificate (SMC) which is also valid for 5
years.
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ISM Auditing Requirements for
vessels
Ships are required to be audited as follows:

internally - one time in 12 months

3rd Party - initially prior to issuing the SMC, then
between the second and third anniversary date
of issue of the certificate (intermediate 2.5 years), and
finally upon renewal of the SMC after 5 years.
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Summary of Part 1
we have reviewed:

an introduction to the concepts of auditing;

recognition of the different types of audit;

understanding of the objectives of auditing;

understanding of the terminology used;

familiarization with ISM on board certification and
auditing requirements.
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Take a break, before you carry on! 10 minutes.
20
Part 2 - Preparation for the Audit
At the end of this part, you will have
reviewed the preparations that are
required in order to ensure that the audit
will proceed smoothly and the result will
favour the auditee (that’s you!).
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Pre Audit Meetings
Usually 2 types:
1) Senior Officers and 2) Departmental
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Senior Officers Meeting

Called and led by Master;

Brief senior officers regarding
depth & scope;

Review & circulate previous
audit findings;

Establish inter-departmental
co-operation, where required;

Meet at regular intervals to
update progress;
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Departmental Meeting

Called by Head of Dept following Senior Officers
meeting;

Brief all crew on scope and depth of audit;

Allocate tasks, i.e. procedural review, verification of
records, etc.;

Schedule mock audits to prepare crew; and

Arrange further familiarization / instruction where
necessary.
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Previous Audit Findings
a) If we do not learn the lessons from history, they have a
way of coming back around to punish us all over again.
b) Findings from previous audits should be reviewed firstly
at departmental level and once a satisfactory conclusion is
reached, this should be reported at managerial level.
c) Do not underestimate what appears to be a small
matter left unresolved from the last audit.
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Procedural Review
As an audit is an examination to determine that operations
comply with planned arrangements and that these
arrangements are implemented effectively the next logical step is to review the company’s operating
procedures and ensure that crew are aware of these and
following the company’s instructions.
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Procedural Review (cont’d)
Job Descriptions

Check accuracy - do the crew actually do what their
job description says that they do?

Is the person carrying out tasks as allocated or have
some tasks been re-assigned?
Auditors will check regarding understanding of job
descriptions - ensure that all crew are aware of theirs.
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Procedural Review (cont’d)
Work Instructions, Record Review

Are all operations been carried out as per
written procedures?

Is the work recorded correctly, on the
correct form, is it signed and filed
appropriately?
Poor document control is one of the
target areas for audit findings. This is
usually a human failing attributed to
laziness or improper training.
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Procedural Review (cont’d)
Lists

(individuals need to prepare themselves – getting organized)
Make a personal list of things that apply to you:
- things to check;
- things to clarify;
- details of procedures to brush up on; and
- prepare for a mock audit, etc.
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Mock Audits

Should be carried out on
department basis;

Use senior officers (from other
departments) wherever possible;

Make them realistic and take them
seriously;

Audit all staff wherever possible you never know who the
auditor(s) will select for interview;

Good training tool
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Common Audit Faults
The following is a list of common faults or
failings that are revealed during an audit:

Lack of knowledge of Safety/Quality Policy;

Not knowing the DP of the company;

Inadequate reading of manuals;

Improper updating of manuals;

Poor Record Keeping;

No awareness of Job Descriptions, and
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Common Audit Faults

Incorrect or not updated Crew Lists;

Out of date Reference Library List;

Lack of Emergency Drills & Exercises;

Emergency/After Hours Contact Details not updated;

Communication Records;

No follow up regarding Incident Reports or NC`s;

No attention to Previous Audit Reports;

Lack of Crew Familiarisation Training, and
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Common Audit Faults

Outdated Vessel Certification Status;

No Master’s Reviews;

Personnel Files maintained incorrectly; and

Poor Document Control.
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Part 2 - Preparation for the Audit
This session is now complete, you have
reviewed preparations required in order
to ensure that the audit will proceed
smoothly and the result will favour you!
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Part 3 - The Audit Process
At the end of this presentation, you will be:
familiar with the total audit process from
- scheduling;
- planning & preparation;
- performing the audit;
- reporting audit findings; and
- following up on audit findings.
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Scheduling
Determined by:

Regulatory (ISM/ISMA) requirements;

Maturity of the system. A developing
system needs to be audited more
frequently; and

Other pertinent factors, i.e. major
changes to the system, results of
previous audits, a serious safety or
quality failure or preparation for a
new project.
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Scheduling cont’d
An audit schedule must be established by the person(s)
responsible for auditing and circulated to each ship.
This schedule should show all planned internal and 3rd
Party audits for a 12 month period.
Internal audits should always be planned to take place at
least 2-3 months before a 3rd Party audit so that any
problems discovered can be attended to effectively.
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Audit Preparation & Planning
The following functions are handled by the
organisation performing the audit (e.g. GL):

Appoint a person(s) to be responsible for the audit;

Notify the auditee;

Agree the audit timetable;

Identify & obtain all relevant documentation;

Brief audit team members (if applicable); and

Develop audit checklists.
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Performing of the Audit
Can be divided into 5 distinct phases: 
The Entry Meeting;

The Tour;

The Interviews;

Evaluation of the Results;

The Exit Meeting
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The Entry Meeting

Attended by Auditors and Senior
Officers;

Introduce auditor(s) and officers;

Confirm purpose & scope;

Review timetable & agenda;

Summarise audit techniques;

Address non-conformities;

Agree time for Exit Meeting;

Arrange for escorts.
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The Tour

Familiarisation;

Observing safe work practices
& procedures;

Auditor may stop and chat with
working staff - remember
he’s still auditing!!!

Will look for maintenance
defects and cross check with
defect reports, etc.
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The Interviews

Conducted following the checklist as
a guide;

Asks “open” questions, making the
auditee do the talking;

Checking records;

Seeking “objective evidence” to
verify compliance with written
procedures.
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- Open Questions

Usually begins with the words
“how”, “what”, “when”, “why”,
“who” or “where”;

Makes the auditee talk, allows the
auditor to gather objective evidence
regarding compliance/non
compliance with procedures.
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- Objective Evidence
Can be defined as:
“information, records or statements of fact
that are based on the auditor’s observation,
measurement and/or test and which can be
substantiated (proved)”;
Used to support the Auditor’s findings, strong
objective evidence is very difficult to dispute.
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- Closed Questions
 Questions
answer;
 e.g.
that generate a “yes” or “no”
Do You?, Have You?, etc;
 Rarely
used in auditing as answers do not
provide auditor with sufficient objective
evidence.
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- Rule of Thumb
 Good
auditors only
talk for 25% of the
interview;
 They
listen for the
remaining 75% - that
means you as auditee
do the talking.
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Evaluation of the Results
This is where the auditor(s)
consider and evaluate the evidence
generated during the audit.
Objective evidence of a departure
from company procedures,
documented requirements and/or
other applicable documents can be
considered as valid justification for
an audit finding.
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- Audit Findings

May also be referred to as NonConformities;

Should be brought to the
attention of the person being
interviewed at the time of
discovery;

Must be reported formally at
the closing meeting on a
Finding or Non Conformity
Report.
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- Audit Findings
Can be categorised as follows:

Major - where the company’s instructions have clearly not

or group of similar findings within the same element that
lead the Auditor to believe there is a serious problem;

i.e. document control failures on the bridge, with personnel
records and maintenance records;
been correctly followed or ignored and this omission
potentially threatens the safety of the ship, or the crew,
or the environment;
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- Audit Findings
Categorized as follows:

Minor - a single or minor lapse of discipline or control
that does not pose any serious or immediate danger,
nevertheless, improvement is required; and

Observation - a comment on an existing condition
with regards to the overall improvement of the system given as advice only, corrective action is advisable but
not mandatory.
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The Exit Meeting

Attended by Auditors and Senior
Officers;

Lead Auditor presents overview of
the audit;

Introduce any findings;

Auditee may at this time dispute a
finding;

If agreeable, auditor may
downgrade or cancel finding.
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The Exit Meeting cont’d

Master to sign to acknowledge
finding - this DOES NOT signify
acceptance;

If available, auditor will present
formal audit report;

Master and Company must
agree on most suitable form of
corrective action - this is then
passed to Auditor for approval.
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Auditor’s Recommendations

Auditees will usually ask the auditor for a
recommendation on correcting the finding;

Auditors are not required to reply; and

Any recommendation from the auditor must
be taken as personal advice - not necessarily
the advice of the organisation conducting the
audit.
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The Follow Up

Master & Company must determine & implement
Corrective Action;

Auditor may require to verify effectiveness of
corrective action in order to close out finding report;

May take the form of a “mini audit” focusing on the
deficient areas.
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The Follow Up

If the corrective action is effective, the finding is
closed;

If not, a new finding report will be issued by the
Auditor and the Company must review the corrective
action taken;

Only when the corrective action is acceptable will the
auditor finally close out the finding.
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The Audit Process
This presentation is complete, during this
presentation, you have reviewed:
the total audit process from scheduling;
- planning & preparation;
- performing the audit;
- reporting audit findings; and
- following up on audit findings.
56
Take a break, before you carry on! 10 minutes.
57
Part 4 - The Human Element
At the end of this session, you will have
been introduced to the human elements
that form an integral part of the audit
process.
This includes differences in personalities,
the importance of knowledge, the effects
of body language and common sins
committed by auditees.
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Human Interaction
Different types of audits
create different pressures
on auditor/auditee.

External & 3rd Party audits
put a distance between
auditor/auditee; whereas

Internal audits may involve
interaction with close work
colleagues.
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What is the objective of the audit?
To verify that all work practices are in compliance
with the documented safety management system;
and;
If not, highlight areas where improvements are
required;

Therefore it is important not to let personal feelings
reduce the effectiveness of the audit, or damage the
harmony of the working environment.
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Please Remember
It is always the system that is
being audited;
- not the individual
crewmember !
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Potential Danger Areas
Can be divided into three areas:

Attributes and Personality of the Auditor;

Attributes and Personality of the Auditee; and

The knowledge base of the Auditor.
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 Attributes and Personality of the Auditor
Can also be divided into six areas:
a)
Fail the Auditee;
b)
The “autocratic” Auditor;
c)
The “wish to be friends” Auditor;
d)
The “untrusting” Auditor;
e)
The “tired” Auditor; and
f)
The ‘busy” Auditor.
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a) Fail the Auditee
The purpose of the audit is
to determine compliance,
not to find non-compliance
at any cost.
It is not true to say that “the more non
compliances found, the more effective
the audit”.
If the auditee is compliant, the auditor
should say so and document such a
result. A positive result is good for
company morale.
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b) The “autocratic” Auditor
Some auditors view the audit
process as their right to give
orders and recommend changes
to procedures.
This is more common during
internal audits where office staff
maybe used as auditors.
Good auditors listen, if they are
constantly giving orders and
making changes - they cannot be
listening effectively.
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c) The “wish to be friends” Auditor
In some cases the auditor may
wish to be friends with
everyone.
They see the audit as a possible
means of damaging such
friendships by exposing possible
weaknesses.
As a result, difficult or searching
questions are not asked, leading
to an ineffective audit.
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d) The “untrusting” auditor
Some auditors are convinced that
all auditees are trying to hide
something, this attitude results in
mistrust and suspicion.
Such auditors are not listening
effectively as their time is spent
searching for hidden meanings.
A good auditor compiles objective
evidence through interview, supported
by documented records. If the auditee
complies, they comply.
67
e) The “tired” auditor
Auditing like many jobs
can become tedious and
repetitious.
Beware of auditors who
have become tired and are
auditing automatically.
Such an auditor has lost
interest and cannot carry
out an effective audit.
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f) The ‘busy” auditor
These usually appear during Internal
Audits.
As a co-worker, the auditor has other
responsibilities and may postpone
the audit because of other
commitments;
Similarly, during your audit, they
may be distracted and constantly
taking breaks to attend to other
things.
This gives the impression that the
audit is not important.
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What to Do?
If during any audit you observe any of the
danger areas just mentioned, you should:
Bring it to the attention of your head of dept or the
Master who should then:

If an internal audit, request the company to review the
selection of their internal auditors;

If an external or 3rd Party audit, advise your company
management, who will in turn, advise the organization
carrying out the audit.
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 Attributes and Personality of the Auditee
There are usually 2 different types of problem
auditees:
a)
The “aggressive” Auditee; and
b)
The “disorganised” Auditee.
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a) The “aggressive” Auditee
Many people, particularly management,
have difficulty when another person
asks searching questions regarding their
work.
The audit is seen as a threat to their
competence and/or ability and the
auditor is viewed as a policeman or spy.
There may also be strong negative
feelings towards the quality/safety
management system, usually resulting
from a lack of training.
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b) The “disorganised” Auditee
Auditees who are uncomfortable with the
audit process may use many tactics to
postpone or delay their interview in the
hope that the auditor will move on.

Not being available at the agreed time;

Being interrupted by telephone calls or
other crewmembers;

Engaging the auditor in idle conversation;
and

Offering a banquet style lunch with
alcohol.
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Do these tactics work?
NO!
Auditors are well aware of such tactics and are trained
to deal with them.
They only create a negative impression of the auditee;
and
The auditor will need to stay around longer to complete
their task, thereby giving them more opportunities to
discover non-conformities.
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 The Knowledge Base of the Auditor
Any auditor must have a good knowledge of the safety or
quality standard, the written procedures of the Company
and the nature of the business of the Company. Without
such knowledge, the auditor may:

Place incorrect level of importance on an aspect of the
standard or procedure, i.e. incorrect grading;

Ask questions outside the scope of the audit or the
responsibilities of the auditee; and

Ask questions or accept answers that cause the
auditee doubt the competence of the auditor.
75
 The Knowledge Base of the Auditor
During internal shipboard audits, it is
possible for the auditor to behave as
a “technical inspector” and not as a
someone trained in auditing skills.
This is particularly prevalent where
the audit is carried out by a
Superintendent, and the audit
degenerates into a technical
inspection/discussion rather than an
audit of the safety management
system.
76
The effects of Body Language
One of the most important yet underestimated
tools at the disposal of an auditor or auditee.
All people master body language without knowing
it and it is a very international language.

Crossing of arms and legs is a sign of being on the
defensive, disinterested or displeased;

Leaning forward denotes hostility; and

Leaning back denotes superiority, confidence and
dominance.
77
How do we communicate?
Research shows that the total impact of a
message is about:

7% verbal (words only);

38% vocal (tone of voice and inflection); and

55% non-verbal (expressions and actions).
78
Try This
Emphasize the world in bold type, see how the meaning changes: -
I did not say he stole the money.
I did not say he stole the money.
I did not say he stole the money.
I did not say he stole the money.
I did not say he stole the money.
I did not say he stole the money.
I did not say he stole the money.
79
What other non-verbal signals do we use?
I don’t know!

Very easily communicated;

Other ways include scratching your
chin, staring into space, looking down
or not responding to a question.

If an auditee is unsure of the
information required, do not use body
language. State clearly that you are not
sure but redeem the situation by
showing the auditor where in the
company manuals, the information is
located.
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I know

Once again, easily interpreted;

Other ways include smiling and
widening of the eyes;

Auditors like confident answers.

Confidence comes from having a
good working knowledge of the
safety/quality management
system.
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I’ve made a mistake

Humans make mistakes, no one
is perfect;

Auditors accept honest mistakes,
do not attempt to cover up by
being dishonest;

If you make a mistake, admit it
then give the auditor the correct
answer or show them the
objective evidence that they
require.
82
Anger or Frustration

Not always against the auditor;

May surface due to external
reasons but do not allow auditor to
see that there maybe problems
onboard the ship or with the
Company - they do not need to
know about them.

May give cause for concern
regarding management style or the
leadership ability of the officers.
83
Shock

Audits can be stressful and auditees
should not become emotional;

Other ways include change of skin
colour, i.e. turning white;

Closing meetings are particularly
stressful. Auditees should accept
justified findings, continuous
improvement benefits all concerned.

Do not be argumentative, you don’t
make any friends this way.
84
Laughter

Beware of innocent comments
intended to be humorous;

Be especially careful regarding
religion or politics, unless you know
the auditor well;

It is very difficult to recover a
situation after saying something
foolish and then expecting an auditor
to take you seriously;

There is a time and place for humour
and a carefully selected joke can be
used as an icebreaker.
85
Criticizing

A very common mistake made
by auditees;

Do not criticize the company,
shore staff, other crewmembers
or the management system in
front of the auditor;

Lack of commitment is a
management failing and is
easily detectable and
considered serious.
86
Superiority Complex

Does not encourage a spirit
of openness and continuous
improvement;

Senior management display
the characteristics of a
dictator where only their
opinion counts;

Middle management blindly
follows in fear; and

Often noticed on ships with
mixed nationality crews
87
Common Auditee Sins (Mistakes)

Lack of understanding of the
system;

Lack of understanding of the
audit process;

Lack of preparation for the audit;

Attempting to delay or distract
the auditor;

Being uncooperative, late or
keeping the auditor waiting;

Being evasive or dishonest;
88
Common Auditee Sins (Mistakes)

Offering information that is not
asked for, required, or that is
outside your area of responsibility;

Being critical of company
management and/or the
management system; and

Bringing personal issues or
grievances into the audit.
89
Tips for a Successful Audit

PREPARE;

Arrange a tour of the vessel.
Highlight location of toilets,
emergency exits, smoking/no
smoking areas, work area for
auditor(s) use, use of cellular
phone, camera, etc.

Prepare PPE for the auditor(s) in
advance. If the auditor(s) need to
change, prepare a spare cabin;

Check for any food preferences;
90
Tips for a Successful Audit

Advise the ship’s voltage;

Introduce the auditor to the crew
to encourage co-operation;

Arrange a guide to accompany the
auditor at all times;

Keep to the audit timetable. If this
is not possible, advise the auditor
of proposed changes;

Maintain a high standard of
housekeeping at your place of
work;
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Tips for a Successful Audit

Answer only the question that is
asked, do not be over
communicative;

Ask the auditor to repeat or rephrase the question if you do not
understand;

Lead the auditor where possible. If
not specified, select the most
competent staff to be audited;

Accept findings where justified.
Argue your case only when you’re
sure.
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Tips for a Successful Audit

If the auditor will stay onboard
overnight, prepare a cabin with
clean linen, towels and soap, etc.

Give necessary SMS shipboard
familiarization & keep a record;

Ensure that the auditor is made
aware of alarm signals and muster
stations;

Advise auditor of ship’s meal
times, etc.
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Part 3 - The Human Element
The final session has been completed!
You have reviewed the human elements that
form an integral part of the audit process.
This included differences in personalities, the
importance of knowledge, the effects of body
language and common mistakes committed by
auditees.
With the knowledge you have now, please
take the questionnaire and check on all
questions again!
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Finally
We hope you will find this course useful and the content
will help you to prepare for the next forthcoming audit!
If you have any comments please write them down and
send them to the HSC Crew Operation Manager!
Thanks for participating and we wish you always safe
sailings!
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