The purpose of internal audits is to continually improve the management system. When I refer to management system, I mean quality, environmental or your business management system. In either case the internal audit should be a intricate part of the management system you are utilizing. Most often the internal audit process or function is under utilized and viewed as a necessary evil in order to meet the requirements of a quality standard.

The time constraints on individuals makes it harder to free employees up to plan, execute, document and follow up an internal audit. The effort to transition internal audits to improvement based, does not make that issue any easier. In order to conduct a meaningful, effective audit that promotes and facilitates continual improvement, the auditor must spend an adequate time preparing. The preparation of the audit dictates how effective it will be.

If we want to improve a process, what is the first step? In all my years as a quality practitioner, I have heard and deeply believed that the first step to improvement is measuring. If something is not measured, you should not expect to improve it. The first step to improving the internal audit process is to measure it. How do you measure it? The internal audit process is a ratio that relates the relative importance of the findings or results of the audit. To keep things easy to understand, let's break the findings down into three categories and they are not major, minor and opportunity for improvement. The three categories are effectiveness, improvement and compliance.

Describing these three factors with an equation we have the following:

V = (E + 2I)/C

Where V = the audit value, E= the number of findings associated with effectiveness, I= the number of findings associated with improvement and C= the number of compliance related findings. The resulting equation will yield a value or index you can use as a reference measurement, the higher the index the more improvement focused the audit activity is, the lower the number reflects a focus on standard compliance.

I am not suggesting to disregard compliance to a standard, I am contending the focus of the audit should be improvement, effectiveness and compliance. Too often compliance is the single biggest focus when conducting audits. There is not much value in finding out that an employee did not complete a form correctly on a given day. An isolated one time event is useless as a tool to improve a management system. The point to remember is that whatever the auditors are focused on is what they will find. If the focus is on compliance issues, that is what is found. It's similar to going bass fishing, you may catch a pike, but for the most part you will tend to catch more bass.

The effectiveness factor relates to those findings associated with improving the effectiveness of the management system. Effectiveness is the gap between where your current performance lies and where you should be or the expected results. A company has a expects to have 20 customer complaints per month, based on history. During an audit, the evidence shows the last few months have had customer complaints of 35, 48 and 55. Further investigation uncovers the largest contributor to customer complaints is "poor technical support". Therefore, findings associated with improving the technical support will improve the effectiveness of the system as will those findings associated with the lack of effort in analyzing the root cause of customer complaints. These types of findings are much more beneficial to improving the management system than one that documents one customer complaint out of hundreds, had no follow up activity.

The improvement factor is associated with findings that improve the overall management system. That seems a bit simplistic but it relates to improving the expectation of the management system. Using the same example above, lets say the customer complaints have been running at about 20 per month or right around the expectation. Further analysis of the complaints uncovers the major cause to the complaints is "poor technical support". An improvement in technical support results in an improvement in the quality system.

A relatively new management system would experience a larger number of compliance issues as opposed to improvement or effectiveness findings. If your management system is matured several years and you are still experiencing a large number of compliance findings, you should evaluate the audit process. Chances are, the auditors are finding compliance related findings because that is what they were trained to do and it is the easiest thing to find. If you dig hard enough you can find an instance where a human made a mistake.

The audit value indicator is a measure that can be used to monitor the health and direction of the audit activity. A continual creep in the audit value could indicate the auditors are focused more on improvement and effectiveness findings or it could mean they have neglected compliance related issues, which is not healthy either. The audit index is a method to measure the internal audit function, because the first step to improvement is measurement.