As a follow up to a recent blog article Check and Balance: 5 questions you need to answer to develop an Effective Audit Tool, I would like to explore the key components in the creation of a specific audit tool. These components will help you build the process on how to evaluate compliance or awareness to Company expectations. In order for this process to be effective, the audit must be written so it can be completed in an objective and consistent manner each and every time completed.
There are 5 key components that should be part of every audit format. These components include;
1. Specific Questions
Audit questions should be based on current policy and procedure and not on a “best practice”, even if that best practice is documented. If the “best practice” is truly the method to complete a task, than it should be written in a standard Operating Manual or be amended to the current documented policy and procedure to reflect this preferred process. In order to utilize the audit as a training tool, each question should be easily referenced to the policy and procedure for further explanation as needed to management.
To be effective, each audit question must be written to audit specific parts of a policy and procedure. Avoid using generic references such as “appropriate”, “necessary”, “approved” or simply asking if the entire policy and procedure is in compliance by using terms such as “per policy” or “per guidelines”. This type of wording may cause the auditor to interpret the meaning or focus on what they believe is most important based on prior individual experiences. Include the specific policy and procedure parts within the actual question to avoid confusion.
2. Instructional Guide
An instructional or reference guide for the audit is meant to provide information on how to audit a question (i.e. time frame of the review, location of key paperwork, etc.), ask probing questions and to know how to document exceptions. Its purpose is not to restate existing policy and procedure. A guide is the specific details the auditor will use to evaluate each question.
What may appear straightforward in a question can be easily misinterpreted by an auditor when determining compliance and noting the details of an exception. Although the guide would be created for the auditor, it can be used by Store or Company personnel as a training tool when required audits are completed internally.
3. Question Type: Discussion vs. Physical Verification
Questions can be asked or answered through discussion or by a physical confirmation. Discussion questions are usually added to an audit to gauge the awareness of the associates by asking open ended questions on a policy and procedure. These questions are either noted as “yes” or “no” or are assigned a lower point value based on its contribution to loss.
Discussion questions should never be used where the answer can be physically verified. The answer would be based on what an associate knows to be the correct policy and procedure, which may not reflect what, is occurring in practice. Any questions noted as “discussion” should be segregated within the audit so the auditor clearly knows which questions should be answered based on the associate’s responses as opposed to which question would require a physical verification.
4. Exception Documentation
When a question is answered as not being compliant to documented policy and procedure, the exception must be clearly documented. This documentation should specifically note review period, dates, times, transaction numbers, associate numbers / names noted reasons and what has been done as follow up by the location to name a few.
Audits should be used as a training tool and without information detailing exceptions, management cannot follow up with associates and provide coaching and training as necessary. If the details are not provided or specific enough on the audit as to why a question was non-compliant, questions could arise on the accuracy of the review and the audit becomes less effective. Avoid any issues and make certain auditors are thorough with the complete documentation of exceptions with sufficient space provided on the form.
5. Action Plan
How effective is an audit if nothing changes? An action plan is an important part of the process as it will require action and follow up by all involved. A good action plan addresses any area of non-compliance within the audit and should include;
How to improve compliance
What specifically will be done to correct any noted issues
Who is responsible to complete this action
When will this action be completed by
Store, District of Loss Prevention Sign Off
A good plan is usually created within days of the audit (14 is a good number to shoot for in days), approved by District Management or Loss Prevention and posted in a visible location to monitor the location’s progress.
Written by Donald Sutherland, Audit Manager