Total Quality Management practices can provide a tool for discovering and providing what internal auditing customers want and need and for measuring quality improvements and performance.
ACCORDING TO W. Edwards Deming, Total Quality Management (TQM) is the organization-wide practice of meeting and exceeding customer expectations. This concept has several components. First, we must find what the customer wants and needs. Next, we must meet those needs on time. Then, we must follow up with the customer. Most importantly, we must continuously refine the process of meeting our customer's requirements.
As internal auditors, our primary customer is the organization we serve. We generate one product: value-added audits. Each audit is an opportunity to fulfill a need, get customer feedback, and refine the audit process.
To be truly successful, it is paramount to know what the customer wants. At the Army and Air Force Exchange Service (AAFES), our internal auditing department has developed an approach for meeting this objective.
* Before TQM
Before implementing TQM, our audit evaluations were results-oriented. In some instances, an auditor might not have generated excellent workpapers, but he or she might have written findings that offered substantial cost savings. The rewards were high because emphasis was on results instead of the process. On the other hand, technically skilled auditors who did not produce audit findings with cost savings were not as highly recognized.
The process was largely subjective. Managers used their expertise and experience to compare auditors to their peers. As personalities came into play, we sometimes judged auditors on general perceptions instead of quantitative measurements of success. After each audit, supervisors met with auditors to discuss the auditors' progress. Supervisors prepared communication records as evidence of the meeting.
Though subjective, this method did measure performance; but it did not ensure quality improvements in the future. TQM is helping us to overcome this weakness.
* The New Way
At AAFES, we recognize that TQM is a process-oriented approach to improving our product. We have found two critical keys to improving our audit process: we must develop measurable goals, and we must be certain that our goals are achievable.
After each audit, auditors-in-charge and audit managers grade each auditor in several areas. Our goal is to measure the technical and qualitative aspects of audits.