A long-time professional college “The Honorable Scott Weyburn”, recently posted an interesting question focusing on benefits of ISO 9001 registration. I posted a response that prompted Scott to ask for more so here it is. Here is a link to Scott’s post which you might want to read first.
Understanding the Problem
The cause of the problem is easy to understand but difficult to correct. In my three decades performing nonfinancial audits for CBs if have found the CB customers primary interest is in sending a signal of sustainability to customers and other interested parties. Improving sustainability performance is subordinate to that perceived imperative. As a result, the organization focuses on passing the audit, not on having an effective management system. Investment is in readying for the audit not on the resources of an effective system. This is partially due to naivety and a lack of readiness in leadership in the organizations.
It is also due to financial tension within the organization. Investing in audit readiness only cost less than skillful implementation of an effective management system. Leadership calculates “If all I want is certification for messaging and developing a MS with that goal is cheaper than an effective system, why would I invest in an effective system?”. Leaderships misunderstanding is almost excusable considering the misrepresentation bombardment from CB’s and AB’s that their certifications and accreditation’s are evidence of system effectiveness.
Audit Services as Commodities
Another reason the certification process is failing is organizations seeking certification services perceive them as a commodity to be purchased from the lowest bidder. They do not understand certification audits are a professional service where auditor and CB competence are critical to obtaining a return on their certification investment.
To be competitive CB’s in the past would reduce the number of audits days and thereby reduce the cost of their service over their competitors. IAF implemented MD-5 to try to control this audit day downward trend. MD-5 is a complex system for determining audit days that was of some help early on. However, as time went on CBs recognized that the only way to be competitive was to reduce the day rates for auditors. Subsequently there has been a continuing downward spiral in compensation of qualified auditors, especially for contract auditors with no employment benefits.
Many experienced auditors like myself have subsequently reduced the number of audits we perform for accredited CBs doing only enough to remain competent for purposes of certification. The CBs now rely on inexperienced, inexpensive, and often incompetent auditors to perform audits on their behalf.
ABs Playing a Role
The ABs have also found themselves in a difficult financial conundrum. There has been much consolidation in the CB business reducing the ABs revenue streams. They recognize the threat to their clients, that major findings of auditor incompetence would bring, and are reluctant to issue meaningful nonconformities that compel change. The incentives created by the ABs for CBs to improve their performance are more prescriptive and lead to “lipstick on a pig” corrective actions that exacerbate the problem.
These are tough problems to solve that cannot be wrestled to the ground overnight. The financial assurance industry addressed similar problems with Sarbanes–Oxley Act of 2002 as well as in the Accounting Standards Codification issued by the Financial Accounting Standards Board (FASB). The best chance of fixing the underlying problems with assurance in the non-financial sector is to enact similar legislation which is unlikely to happen in the foreseeable future.