External audit

An audit may concern the whole organization, a system, a specific process, a project or a product. The basis for assessment during an audit is the degree of compliance of the audited aspects with established standards, legal regulations, norms, internal rules or other rules related to the subject of the audit. The term audit originates from the Latin word “auditio” which means listening.

An external audit involves the performance of a thorough analysis of the audited area by an independent auditor. The person performing the external audit must not be associated with the audited entity.

Interestingly, the first audits of this type were conducted as early as in ancient times. The ancient Egyptians, Romans and Greeks already several hundred years ago controlled the accounting records. In this way they evaluated the operation of economic units.

Nowadays, an external audit is a very important research instrument taken into account for risk assessment when managing an organization or a project. A well conducted audit identifies challenges in the management area. Additionally, an audit also helps to determine the sources of organizational problems and identifies risks in the processes under investigation.

Why is an external audit conducted?

The external audit as an assessment of specific activities and the degree to which the objectives have been achieved is an important element of the quality management system. The audit is also a very important process which allows for improving the functioning of the organization. A company which wants to gain prestige and improve its position on the market by obtaining a quality management system certificate should apply for such an audit to the certification unit.

It is also worth knowing that the external audit may also concern other systems. For example, these may be occupational health and safety systems (ISO 45001), information security management systems (ISO 27001), environmental management systems (ISO 14001) or automotive standards (IATF 16949).

Second party audit vs. third party audit

There are two types of external audit:

• Second party audit
• Third-party audit

What is the difference between the two?

A second party audit is also sometimes referred to as a supplier audit. In this arrangement, an entity commissions an audit to a potential or current subcontractor. Such an audit very often concerns the processes between the production company and the supplier. Companies with a quality management certificate (e.g. confirming the system’s compliance with the requirements of the ISO 9001 standard) that want to start cooperation with subcontractors without proper certification often decide on a second-party audit.

The third-party audit is associated with the certification procedure. It is carried out by entities that confirm compliance of the system with the requirements of the standards. Entities carrying out third-party audit must have the appropriate rights to do so. A positive result of such an audit is the basis for obtaining a certificate. In this case the application for such an audit is submitted by the interested party.

An audit is not an inspection

An external audit is a valuable source of information about what is going wrong in a company. A report from an external audit should first of all indicate what should be improved in order for the processes to function better. The task of process owners is to think about what should be done to remove the sources of non-compliance and minimize potential risks in the process.

An audit should not be treated as an inspection. Moreover, you should also not get too personal and emotional about the auditing process and the auditor himself. An audit is a tool to improve the company’s situation, not an unpleasant episode for its employees.

A professionally conducted audit brings measurable benefits to the company. External audit helps to identify risks and areas with potential for development. In addition, the audit somehow enforces the introduction of certain changes, which as a result may prevent the recurrence of the same non-conformities.