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  Audit Management  >  Internal Audit Procedure for Manufacturing Company

Internal Audit Procedure for Manufacturing Company

internal audit procedure for manufacturing company

The internal audit focuses on improving process flows, cybersecurity, and the organization’s overall efficiency.

internal audit procedure for manufacturing company
quality-based approach for internal audits

Create a Quality-based Approach for Internal Audits

Any organization with a compliance management program must regularly conduct internal audits. These audits assure that the business operates at maximum efficiency across all departments.

Internal audits for the entire quality system are usually conducted annually. By establishing a disciplined, integrated approach to policies, regulations, cybersecurity, risks, controls, and issues, organizations can demonstrate a firm grasp of the regulatory compliance necessities and provide transparency into overall business risks.

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Related Assets

What is the role of ISO 9001 in an internal audit?

Clause 9.2 of ISO 9001:2015 states that “the organization should conduct internal audits at planned intervals to provide information on whether the quality management system conforms to the organization’s own requirements, the requirement of ISO 9001:2015 standards and is effectively implemented and maintained.” Essentially ISO recommends conducting an internal audit to ensure that the organization is compliant with regulatory requirements and take corrective action if necessary.

How to perform a quality control audit in a Manufacturing Business?

There are five critical steps to properly perform a manufacturing process audit. Here’s a checklist of everything one needs to do to learn how to audit the manufacturing business.

Select Audit Type:
Before starting the audit, identify the focus and goal that needs to be achieved. Once the goal is set, it is easy to ascertain which of the following audits must be performed.

  • System audits evaluate a company’s management systems and ensure that all elements and processes are effective. This audit also ensures that the development and implementation of the systems consistently meet specified requirements. For example, a QMS audit will review its existing quality system to comply with company policies and the required regulations.
  • Product audits examine a company’s services and products to ensure they’re compliant with government policies, performance standards, and company quality standards.
  • Process audits review all company processes to ensure efficiency within their established limits. This audit also checks operation time and responsiveness and the effectiveness of each procedure and process specifications.
  • A first-party audit is an internal audit designed to evaluate the performance of the organization’s objectives, identify problem areas and find processes that need continuous improvement. This audit is conducted by employees who take on the auditor’s role.
  • The second-party audit is an external audit conducted by auditors hired from outside the organization. These independent audits may impact the buying decisions of the customer.
  • A third-party audit is performed by an external organization. This is done to ensure there is no conflict of interest resulting in recognition, license approval, certification, or penalty being issued by the third-party organization.

List Tasks and Perform Audit:
Based on the audit that should be conducted, the auditor will have to perform specific tasks to accurately evaluate a particular area’s performance and effectiveness. When it’s time to perform the audit, preparing a checklist that has each task listed in a series of steps is recommended.

Record Findings in an Audit Report:
Once the audit is completed, the auditors must create an audit report to document all the findings. This report must be thoroughly reviewed before planning the next step.

Determine and Perform Corrective Action:
Based on the findings from the reports, determine and perform corrective actions to remedy the issues listed. It is advised to note everything that will be done to resolve each problem in a separate report. This will help keep track of the methods that have been tried and help choose suitable corrective actions in the future.

Schedule a Follow-Up Audit:
After corrective action is carried out, conduct another audit to measure changes instituted by the corrective action.

  • If system processes, performance, or products show improvement, record the findings in a separate audit report and discuss it before closing the audit.
  • If the findings indicate minimal or no changes in any processes, performance, or products, make a note in a separate audit report to determine the subsequent corrective action needed. Continue this pattern until there is an improvement.

Remote Audits of Quality and Safety Processes

A combination of remote and in-person internal audits can speed up the audit process and make life easier for quality and safety teams.

Benefits of Using Audit Software for the Manufacturing Industry

Maintaining quality, compliance, and operational efficiency is paramount in today's highly competitive manufacturing landscape. Audit software tailored to the manufacturing industry has become invaluable for achieving these goals. Here are some key benefits of using manufacturing audit software:

  • Enhanced Efficiency and Accuracy: Manufacturing audit software streamlines the entire audit process, from planning and scheduling to data collection and reporting. This automation reduces the chances of human error and ensures audit tasks are executed consistently and accurately.
  • Real-Time Data Access: Modern audit software allows auditors to access critical data in real time. This is particularly beneficial in the manufacturing industry, where instant access to production, quality, and compliance data can lead to quicker decision-making and issue resolution.
  • Comprehensive Audit Trail: Audit software maintains a complete audit trail, offering transparency and accountability. In the manufacturing sector, this ensures that every aspect of the production process is documented, helping to identify the root causes of issues and prevent future problems.
  • Standardization of Processes: Manufacturing audit software enables the standardization of audit processes across different facilities and locations. This consistency is essential for ensuring that quality standards and compliance requirements are met uniformly.
  • Compliance Management: In the highly regulated manufacturing industry, compliance with various standards (e.g., ISO, FDA, IATF) is critical. Audit software helps track compliance by providing clear visibility into adherence to regulatory requirements.
  • Risk Mitigation: Identifying and mitigating risks in the manufacturing process is essential to prevent costly errors, recalls, and safety incidents. Audit software helps in identifying potential risks early on and facilitates the implementation of corrective and preventive actions.
  • Time and Cost Savings: By automating manual audit processes, manufacturing audit software saves time and reduces administrative costs. This efficiency translates into cost savings and allows resources to be redirected towards value-added activities.
  • Reporting and Analytics: Manufacturing audit software generates comprehensive reports and analytics, providing valuable insights into the manufacturing process's performance. These insights can inform strategic decisions and continuous improvement efforts.
  • Integration Capabilities: Many audit software solutions can be integrated with other manufacturing systems, such as Quality Management Systems (QMS), Enterprise Resource Planning (ERP) systems, and equipment sensors. This integration ensures seamless data flow and facilitates a holistic view of operations
benefits of using audit software for Manufacturing industry
best practices for conducting audits in manufacturing industry

Best Practices for Conducting Audits in the Manufacturing Industry

While manufacturing audit software is a powerful tool, its effectiveness relies on best practices in audit management. Here are some best practices for conducting audits in the manufacturing industry:

  • Planning and Preparation: Thoroughly prepare for audits, including defining audit objectives, scope, and criteria. Ensure that the audit team is well-trained and equipped with the necessary skills and tools.
  • Risk-Based Approach: Prioritize audit areas based on risk factors. Focus on critical processes and areas that have the highest impact on product quality, safety, and compliance.
  • Risk-Based Approach: Prioritize audit areas based on risk factors. Focus on critical processes and areas that have the highest impact on product quality, safety, and compliance.
  • Standardized Checklists: Use standardized checklists or audit templates to ensure consistency across audits. These checklists can be customized to align with specific industry standards and regulatory requirements, such as the IATF checklist for automotive manufacturing.
  • Real-Time Data Collection: Utilize mobile devices or tablets to collect audit data in real time. This minimizes delays and allows immediate action if non-conformities are identified.
  • Document Findings: Document audit findings, including non-conformities, observations, and recommendations. Use the manufacturing audit software to maintain a centralized repository of audit reports.
  • Corrective and Preventive Actions (CAPA): Implement CAPA processes to address identified issues promptly. Monitor and track the progress of corrective actions to ensure resolution.
  • Continuous Improvement: Use the insights and data gathered from audits to drive continuous improvement initiatives in manufacturing. Identify trends and patterns that can lead to operational enhancements.
  • Training and Competency: Ensure auditors are well-trained and competent in the audit process and relevant industry standards. Provide ongoing training to keep auditors up to date with evolving regulations and technologies.


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Internal Audit Procedure for Manufacturing Companies

What is the Internal Audit Procedure for Manufacturing Companies?

Internal audits effectively act as a “pre-test” before the external auditors arrive. A successful and comprehensive internal audit in a manufacturing company can act as a “practice run” that allows organizations to remediate issues before the external audit and prevent official findings. Cybersecurity and manufacturing process audit can also be part of company internal audit. As automation and digitization enter manufacturing processes, cybersecurity becomes an integral part of audits.

An auditor performs company internal audits. An auditor is a person who has good knowledge of both business and industry standards. The auditor conducts the audit as per the standards. Quality auditors can be external or internal.

  • External auditor: the third party hired from an approved agency, customer, or client to evaluate the quality system or products
  • Internal auditor: an employee of the company

The following steps are part of company internal audit procedure for manufacturing companies:

  • Identifying Subject Matter Experts (SMEs)

    To perform an internal audit, the organization must involve stakeholders from across the organization. For example, SCADA experts and internal IT experts must collaborate to create a holistic security-first compliance approach.

  • Document Internal Control Procedures and Reasons for them

    Establish a risk analysis, procedures, policies, and processes. This document acts as the roadmap for the compliance program, which helps create the audit scope.

  • Continuously Monitor for Control Effectiveness

    Connected devices must interact seamlessly and have risk management controls in place. The organization must constantly monitor and remediate any potential weaknesses as soon as possible.

  • Continuously Document Your Monitoring

    Audits rely on documentation. Even when continuously monitored, the auditor may return findings without proper documentation. Documentation proves governance over the program, enabling the Board of Directors to oversee the program.

  • Create an Internal Audit Workflow

    Communication before, during, and after the audit helps maintain security and compliance. It is imperative to create a process for preparing, reviewing, and responding to the internal audit that ensures that all tasks are completed promptly.

mastering manufacturing process audits: iatf checklist

Mastering Manufacturing Process Audits: IATF Checklist

The International Automotive Task Force (IATF) is an organization that develops standards for the automotive industry. To ensure compliance with IATF standards, manufacturers often use a comprehensive manufacturing process audit checklist. Here's a brief overview of key elements typically found in an IATF checklist:

  • Management Commitment: Assess the commitment of top management to quality and IATF standards. Look for evidence of their involvement in setting objectives and ensuring the QHSE (Quality, Health, Safety, and Environment) policy is communicated and understood.
  • Risk Management: Evaluate how manufacturing risks are identified, assessed, and managed. Verify that a proactive approach is taken to prevent quality issues and non-conformities.
  • Risk Management: Evaluate how manufacturing risks are identified, assessed, and managed. Verify that a proactive approach is taken to prevent quality issues and non-conformities.
  • Product Development: Examine the product development and validation process, ensuring that it meets IATF requirements. This includes design and development planning, customer requirements, and design verification and validation.
  • Supplier Quality: Assess the control of externally provided processes, products, and services. Ensure that suppliers and subcontractors meet IATF quality standards.
  • Production Control: Review production planning, control, and monitoring processes. Verify that process capability is assessed, and that process outputs are consistent with product requirements.
  • Measurement and Analysis: Evaluate how measurement, analysis, and improvement activities are carried out, including calibration, monitoring, and data analysis.
  • Non-Conformity and Corrective Action: Assess the process for identifying, documenting, and addressing non-conformities. Verify that corrective actions are taken, and their effectiveness is monitored.
  • Continuous Improvement: Evaluate the organization's commitment to continual improvement, using data and lessons learned from audits to enhance processes.

How can ComplianceQuest Audit Software help conduct internal audit in manufacturing businesses?

With the advent of technology, manufacturing processes and supply chain management is monitored, run, and maintained globally. As the industry is confined to strict regulations, organizations must conduct internal and external audits to ensure the safety of employees, quality of products, while staying competitive in a constantly changing world. With CQ Audit Management Software, planning and managing the entire audit cycle is effortless. The cloud-based scalable and flexible system helps players in the manufacturing industry with various audit requirements, from audit planning and scheduling to documenting findings to initiating CAPAs.

Why manage audit risk in the manufacturing industry?

Managing audit risk in the manufacturing industry is imperative due to the sector's inherent complexities, regulatory requirements, and potential impact on various stakeholders. Manufacturers face rigorous audits to ensure compliance with industry standards, environmental regulations, safety protocols, and quality control measures. Effective risk management in audits helps manufacturers identify, assess, and mitigate potential issues before they escalate, ensuring adherence to legal and industry standards. The manufacturing process involves intricate supply chains, intricate machinery, and diverse workforce operations, making it susceptible to various risks such as operational errors, supply chain disruptions, or regulatory non-compliance. Manufacturers can proactively manage audit risk, enhance operational efficiency, reduce production disruptions, and maintain product quality. This, in turn, safeguards the reputation of the company and prevents potential legal and financial consequences.

Moreover, the manufacturing industry often deals with sensitive materials, which, if mismanaged, can lead to environmental hazards. Effective audit risk management ensures that environmental, health, and safety standards are met, reducing the likelihood of accidents and minimizing the environmental impact.

Great product, support, and people to work with!

We have rolled-out CQ across our company to automate various elements of QMS requirements such as Document Management, Complaints, Non-conformances, Corrective Action (8D and A3), Supplier Management and Audit Management. We have been using the software for more than 2 years. We are glad to see how well the system is being used across the company. We have several thousand users on the system currently and working to scale the usage further. CQ solution has been configured to meet our needs, works elegantly across languages, across time zones, and business verticals. With integration between CQ and SAP to exchange critical data, the process automation provides a lot of productivity.

CQ configuration team and support have worked hard to ensure that our needs continue to be met. They consistently go above and beyond. We cannot be more pleased with our use of CQ QMS capabilities and would definitely recommend to anyone who is looking for a modern cloud based EQMS solution especially if you want a scalable EQMS solution.

Lia Budiman,
Solution Consultant

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continental contitech

Pillars of audit risk in the manufacturing industry

In the manufacturing industry, audit risk management revolves around several key pillars that address different aspects of the business. These pillars ensure compliance, identify potential issues, and maintain operational integrity. The primary pillars of audit risk in the manufacturing industry include:

Pillars of audit risk in manufacturing industry
  • Compliance and Regulatory Adherence: Manufacturers must adhere to many regulations and standards, covering quality control, environmental sustainability, workplace safety, and product safety. Non-compliance poses significant audit risks, and robust systems must be in place to ensure that the organization adheres to all relevant regulations.
  • Supply Chain Management: The manufacturing process is intricately linked to supply chain operations. Audit risk arises from supply chain disruptions, quality control failures in sourced materials, or ethical concerns within the supply network. Effective supply chain management is crucial for mitigating these risks.
  • Quality Control and Assurance: Maintaining product quality is fundamental in manufacturing. Audit risk in this context involves the potential for defects, deviations from specifications, or issues in the production process that may compromise the quality of the final product. Rigorous quality control and assurance processes help minimize these risks.
  • Health and Safety Protocols: The manufacturing environment often involves machinery, materials, and processes that carry inherent risks to employee safety. Effective health and safety protocols are essential to prevent accidents and ensure compliance with occupational safety regulations.
  • Data Security and Cybersecurity: In an increasingly digitized manufacturing landscape, protecting sensitive data and maintaining robust cybersecurity measures is critical. Audit risk arises from potential data breaches, intellectual property theft, or disruptions to critical manufacturing processes due to cyber threats.
  • Environmental Impact: Manufacturing activities can have a significant environmental footprint. Audit risk in this context involves non-compliance with environmental regulations, improper waste disposal, and the potential for environmental accidents. Robust environmental management practices help address these risks.

Optimizing Manufacturing Audit Procedures

Manufacturing audit procedures must be rigorously planned and executed to ensure compliance with internal audit standards and to enhance operational efficiencies. An optimal audit procedure involves detailed planning, the right audit frequency, comprehensive documentation, and adherence to the best practices in manufacturing audits.

  • Internal Audit Standards for Manufacturing: Determining the correct frequency of audits and scheduling them effectively is key to maintaining ongoing compliance and quality assurance. Regular audits, such as annual system audits and more frequent process audits, are recommended to continuously monitor and improve manufacturing processes. Proper scheduling helps in preemptively identifying potential issues and ensuring that the manufacturing operations adhere to both internal and external standards.
  • Audit Frequency and Scheduling in Manufacturing: Determining the correct frequency of audits and scheduling them effectively is key to maintaining ongoing compliance and quality assurance. Regular audits, such as annual system audits and more frequent process audits, are recommended to continuously monitor and improve manufacturing processes. Proper scheduling helps in preemptively identifying potential issues and ensuring that the manufacturing operations adhere to both internal and external standards.
  • Best Practices for Manufacturing Audits: Adopting best practices for manufacturing audits is essential for achieving thorough and effective audit outcomes. These practices include:
  • Pre-Audit Planning: Thoroughly understanding the scope and objectives of the audit.
  • Risk-Based Audits: Focusing on areas with higher risks to prioritize resources effectively.
  • Use of Technology: Implementing audit management software to streamline the audit process.
  • Engagement of Stakeholders: Involving cross-functional teams to ensure comprehensive audit coverage.
  • Continuous Training: Keeping the audit team updated with the latest standards and methodologies.
  • Supplier Audit in Manufacturing: Supplier audits are integral to ensuring that the supply chain meets the required quality and compliance standards. These audits assess the supplier’s ability to meet contractual obligations, comply with regulations, and maintain consistent product quality. Effective supplier audits help in mitigating risks associated with supply chain disruptions and non-compliance.
  • Audit Documentation and Reporting: Accurate documentation and detailed reporting are pivotal in the audit process. Audit documentation captures all findings, non-conformances, and areas for improvement. Comprehensive reports support decision-making and are essential for tracking the effectiveness of corrective actions over time.
Internal Audit Procedure for Manufacturing Companies

Detailed Overview of Compliance and Standards

Compliance and adherence to standards are the backbones of effective audit systems in manufacturing. Ensuring compliance with global standards like ISO, FDA, and IATF is crucial for meeting legal requirements and maintaining high quality. Modern audit software supports these efforts by automating compliance checks and maintaining a robust audit trail.

  • Navigating ISO Compliance in Manufacturing Audits: ISO standards are particularly significant in manufacturing audits. They provide specific guidelines for audit frequency, methodologies, and reporting standards. Adhering to ISO audit standards ensures that manufacturers meet international quality and safety benchmarks, thus enhancing market competitiveness.
  • Leveraging Audit Software for Enhanced Compliance: Using advanced audit software can dramatically improve the effectiveness of compliance management. Features such as real-time data access, automated reminders for audit schedules, and integrated reporting tools ensure that audits are thorough and compliant with all standards. This software also provides scalability and customization, allowing manufacturers to adjust the audit processes as per their unique operational needs.

Streamline and Automate your end-to-end audit lifecycle with AI-enabled features in ComplianceQuest’s Audit Management Solution

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Frequently Asked Questions

  • To ensure the most significant benefit for an organization, audits are crucial for assessing the success of products, processes, and systems, whether it is existing or newly implemented. This is an essential component for:

    • Evaluating the conformity or nonconformity of the quality system based on specified requirements

    • Identifying whether the quality policies meet quality standards

    • Verifying objective evidence of processes

    • Ensuring the usage and sale of products based on regulation

    • Providing evidence to reduce and eliminate any problem areas

    • Taking corrective action for deficiencies

    • Recognizing improvement opportunities

  • Some of the benefits of using audit software in the manufacturing business include the following:

    • Faster and more efficient audit processing

    • Meet product quality requirements and overall manufacturing business goals

    • Improve manufacturing productivity and general business operations

  • Organizations implement the ISO 9000 group of standards to achieve compliance with their commitment to quality management. To ensure compliance, internal audits and audit planning play a key role. Some key advantages of implementing ComplianceQuest’s EQMS are:

    • Complete alignment to ISO 9001, ISO 13485, CGMP, and other regulations.

    • It is time-saving, cost-effective, paperless, and improves enterprise-wide data visibility

    • Serves as the single source of truth for all quality-related data and information

    • Documents and records are readily identifiable and traceable

    • Facilitates cloud-based storage of documents and records

    • Helps maintain data confidentiality and security

    • Provides easy-to-navigate dashboards and reports

    • Helps in risk identification, control, and monitoring

    • Ensures integration of the entire quality workflow across customer, supplier, and internal processes

    • The training management process is directly integrated with the EQMS workflow

    • New changes made in QMS can be easily communicated to the stakeholders

    • Employees are aware of the timelines and accountability


    ComplianceQuest’s Audit Management software is designed to drive efficiency into the audit management workflow. The software supports multiple stakeholders, including auditors, quality engineers, quality leaders, and senior management.

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