AS 9100 Internal Auditing & Conflict of Interest

 

The basics of auditing is that it be objective and conducted by auditors with no conflict of interest. AS 9100 Clause 9.2 has expectations particularly in clause 9.2.2 c to ensure objectivity and impartiality. The definition in ISO 19011 clause 3.1 emphasizes the auditor independence. Clause 4 of ISO 19011:2018 provides guidance in subclause ‘e’ on independence, wherein it requires freedom from conflict, but with a caveat. In that it says ‘if practicable’. That "if practicable" needs to be interpreted by the organization in a mature and responsible manner.  Technically you one could argue, that “if practicable” could be used to mean you could audit your own system! AS 9100internal auditor training clarifies the requirements of the standard.

However, this would mean the objectivity of the audit would be lost. Interpreting this clause of ISO 19011 is demanding. To ensure objectivity with enough resources available a medium to large company must have independent auditors. This provision is to protect some very small companies, with just 3 or 4 or for that matter any lower number of employees, thereby being constrained in personnel who have completed an AS 9100 internal auditortraining and are competent to conduct audits. Sometimes, it may be low cash flow companies trying just about manage in difficult times, when they would use the provision of this guideline to audit in-house within the constraints of availability.

Considering the risks of auditing your own systems and thereby losing objectivity should be a consideration when auditing. Independent auditors can provide the inputs to top management to make better decisions ensuring continual improvement of the management system. It is for consideration, when interpreting the ISO 19011 guidance on auditing, that in saving resources the biased inputs could harm the organization. Further, the top management may make decisions based on biased inputs. Another drawback of auditing where a conflict of interest is present, is that auditors may make observations resulting in expensive decisions on resources, modernization, selection of a site or product which is actually not suited or ideal for the organization. AS 9100 internal auditor training clarifies how the audit process should be and what measures should be taken toa void this conflict of interest.

Outsourced processes, particularly when they are second parties, may to keep a contract, want a biased audit in their favor. ISO 19011 in its 2018 update, has updates related to audit ethics. One would think that system maturity would have inculcated a culture of leadership accepting non-conformities to make good decisions. However, often the emphasis is on immediate revenue and decisions are made without considering the long-term ill-effects on the organization. Often auditors are selected whose audits do not provide valuable inputs by identifying where control and resources and not adequate. The resulting loss in customer focus leads the client to eventually select another provider! After all a non-conformity drives correction and corrective action. So, the only bad non-conformity is the one which the organization does not know about!

Take the case of ISO 28001 standard which is used to manage security of the global supply chain. A decision based on a biased audit could create a breach in security. For ISO 45001 the safety or health of the personnel may be jeopardized by resource decisions based on audits which lack objectivity because they were conducted by auditors who were not ethical in their conduct. There is therefore much to be said for independent auditing. Auditors of Aerospace quality management systems must complete their AS 9100 internalauditor training. However, where there is no option because of manpower constraints or low resources and funds after giving due weightage to the risks of the decision such audits of the auditor’s own system may be permitted.