Customer Feedback – An Important Instrument of Quality Management in Internal Auditing
In today’s blog article an elementary part of quality management is presented by Marc W. Theuerkauf: The measurement of customer satisfaction to identify potential opportunities for improvement. The article gives an insight into possible arrangements and practical tips for implementation. Mr. Theuerkauf is a CISA, a CCSA, a recognized auditor for audit systems, has been self-employed for 3 years and has over 15 years’ experience in consulting and auditing.
The hows, whys and wherefores of Quality Management in Internal Auditing
According to the definition of the IIA’s international standard, the IPPF, Internal Audit is a body that provides independent, objective audit and advisory services designed to create value and improve business processes. But how can you tell that you have created added value from the point of view of the most important clients and have really improved the business process? As a child I learned from the theme song to the German version of Sesame Street that “Wieso weshalb warum? Wer nicht fragt bleibt dumm….” [How, why and wherefore….who doesn’t ask remains stupid]”. It costs nothing to ask questions, keep an open mind, take an interest and enable learning success.
“You can’t read anything about it in the standards! Is it really necessary to do so? Well the answer is: yes and, again, yes. The IPPF standards do not contain any mention explicit of words like customer survey, customer satisfaction or customer feedback. It is only in the implementation aids on the “1300 Quality Assurance and Improvement Program” (QAIP) that we find something of interest. With regard to ongoing monitoring, it should be noted that customer feedback on the efficiency and effectiveness of the audit team must be obtained and that this can be done using survey tools where necessary. The periodic evaluation will determine the degree to which customer expectations have been met.
Beyond the IPPF, an effective quality management system according to ISO 9001 provides for the monitoring of customer satisfaction and the definition of methods for collection, monitoring and verification.
How – customer satisfaction and feedback in the context of a QAIP
The measurement of customer satisfaction and the collection of feedback regarding the audit and the fulfillment of expectations should take place within the framework of the QAIP. A distinction must be made between the two following levels of “internal assessment” of an internal audit:
- Permanent monitoring – customer surveys at project level
- Periodic self-assessment – stakeholder survey (Audit Committee, Executive Board)
If you want to conduct customer surveys, the question arises as to whether to do so through structured interviews or questionnaires. The latter have the advantage that the results can be easily displayed graphically and used in the annual QAIP report using of measurable scales, on a per audit basis and showing change year-on-year.
Many market providers of audit management systems offer automated customer survey capabilities in their software solutions. Unfortunately, the taking into consideration of change over multi-year periods is usually missing here, since the quality management is not represented holistically in such systems.
If the customer survey is to be carried out using questionnaires rather than interviews, the question arises as to how to create such a questionnaire. There is a lot of literature and diploma theses that can be consulted on this topic. Some of the most important points that have also proven their worth in practice are listed below:
- Use of neutral questions, which are not biased
- Formulate questions simply and unambiguously
- Appropriate length of the questionnaire, which means that the answer ideally takes only a few minutes.
- Rating scale should allow neutral answers, therefore choose an odd number of possible answers
- Allowing for open feedback
- Identifying different subject areas
- Coverage of the relevant topics for the respective recipient:
- Audit project – audit phases
- Stakeholders – added value
Focus topics at project level
The survey of the audited unit at project level is usually carried out using questionnaires, but can also be carried out in an interview. When obtaining feedback, the following topics should be covered:
- Field work
- Employees – professionalism, objectivity, knowledge
In the case of negative answers, a successful practice is for the Chief Audit Executive to contact the responder personally afterwards and investigate the matter further.
Since employee-related questions in the form of questionnaires, depending on their wording, fall within the scope of employee evaluation and, where necessary, may be subject to co-determination, it is advisable to coordinate the questions with the personnel department and the works council. If it is not possible to do so, the survey should be carried out without these points if necessary, as otherwise important elements of the customer feedback will be lost for the purposes of improvement.
Topics of focus at the level of other stakeholders
When seeking feedback from other stakeholders, such as members of the audit committee, board members or heads of department, the focus should be more on meeting expectations, general added value, the risk-oriented orientation of internal auditing and the partnership relationship. This feedback can also be obtained through questionnaires or structured interviews. The following core topics are to be dealt with in greater depth:
- Value contribution / added value
- Risk focus
- Competence of Internal Audit
Whether you are conducting structured customer interviews or gathering feedback through questionnaires, both methods provide important clues about the current perception of internal auditing within the organization and possible improvement approaches. The results provide valuable information for an effective internal audit Quality Assurance and Improvement Program (QAIP) and should not be omitted from an annual QAIP report to management.
In addition to quality management, Mr. Theuerkauf supports various companies in a variety of activities in the area of auditing. These include support in conducting audits at home and abroad, as a contact for internal audit issues and much more. You can find further details on his website (Internal Audit Services).