South East Training - Business Process Auditing Toolkit

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Observation Statements

Business process deficiencies identified during the course of a business process audit are written up in the form of observation statements that are presented to the auditee management at the closing meeting. These statements form the basis of the corrective action that the auditee management should initiate as soon as the audit has been completed. It is important that these statements are factually correct, point to the reason for the deficiency if this is known and provide a conclusion.  They should also include the evidence that has led the auditor to raise the issue as a deficiency.  The observations statements do not, however, include suggestions for rectifying the problem.  It is up to the auditee management to determine the corrective action.

The Format of Observation Statements 

Observations should be structured to include:

  • The audit criteria
  • The requirement
  • Your observation (state your evidence)
  • Why there is a problem
  • The cause of the problem (if known)
  • Your conclusion.

Your conclusion should refer to one or more of the following:

  • Existence: There is an absence of a necessary system
  • Compliance: Failure to comply with the defined system
  • Effectiveness: Failure to achieve objectives
  • Economy: A cheaper option for achieving the same outcome exists
  • Efficiency: Outputs do not justify the inputs (a more efficient way exists)
Tips on Completing Observation Statements                   

Avoid the following phrases:

  • The audit team looked at….
  • The audit team identified that….
  • During the audit it became clear that….
  • The audit team understands that….
  • The audit team considered……

………..just state the evidence you have!

Reconsider your findings if you are tempted to use any of these phrases:

  • The audit team could not identify….. (Were you looking hard enough?)
  • There appears to be….. (You are not certain)
  • It seems that….. (You are not certain)
  • Anecdotal evidence suggests that…. (You don’t have the evidence)
  • This obviously means/is because/makes….. (Auditor opinion)

…… your evidence or withdraw the observation statement!

Some Examples

 Example 1 - Ineffectiveness

Manual note ABC, Version X, states that firefighters should return defective radio equipment to ICT so the cause of failure can be determined.

Four Firefighters at Fire Stations A, B and C, stated that although they had completed Hazard Reports (HR 1,2,3, 4) regarding the perceived failure of radios to operate as expected, they had not returned the equipment to ICT claiming they were unaware of the requirement. This has made it impossible to determine whether or not the equipment ‘failures’ were due to the environment in which they were being used or due to battery charging issues.

The lack of communication of the requirement in manual note ABC to impound and return defective radio equipment to ICT has led to ineffectiveness in the system for equipment fault analysis and repair.

Example 2 - Inefficiency

The Training Centre Bookings Schedule showed that 50% of all courses over the last 6 months and 85% of all courses over the last month (May 200X) scheduled to run at the Training Centre had to be cancelled owing to a lack of participants.

The XXXX Borough Commander stated that despite staff being nominated for training 6 months in advance of the advertised date, the Training Department did not notify participants of their attendance on courses until two weeks prior to the start of any event, which did not leave enough time for participants to make the necessary arrangements to attend. Records for cancelled courses BA12, BA13 and BA14 all scheduled for May 200X confirmed his statement.

The Training Manager stated that the delays were due to both the Operations Department and HR having to approve the nominations prior to scheduling.

The process for booking participants on to training events is inefficient, leading to an uneconomic use of training facilities which are under-utilised.

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