As with any change to the international standard ISO 9001, or one of its ‘cousins’, like ISO/TS 16949, AS 9100 there’s an opportunity to review and improve the way an organization implements these requirements.
One important requirement, the internal audits, should be focused on the processes of the quality management system and recurring questions auditors have include; “How do I audit a process?” “Which processes should I start with?” and “How will I know if the process is effective?”
In the coming issues, we’ll be taking a look at practical answers to these questions and more. To start with, we’ll investigate how to get organized when planning and preparing to audit a business process……
A process can be defined as “activities which transform inputs into outputs”. One might add, “under controlled conditions”, since we usually want to be able to predict a (good) result! From this definition, we know a number of things already about any process, they have:
This is helpful, but heading off to do an internal audit with 4 topics on our checklist is unlikely to help us reveal if the process is working as intended. As auditors, we have to develop a better understanding of what an effective process requires to deliver a satisfactory outcome for the organization and its customers.
Most business processes have some form of goal or objective assigned to them, so that performance can be determined. This might be focused externally on customers’ needs or internally to the organization. And it’s usual that these goals and objectives have a measurement associated with them. If the process is working effectively, it’s by these performance criteria that an auditor can tell what’s being achieved.
In addition, it’s desirable to produce a consistent result; therefore, the process must be under control. Most of us know the wailing sound (output) made by a loudspeaker, when the microphone (input) is placed too close to that speaker – it’s called feedback! You can certainly measure the sound level, but the process is out of control! Our business processes need controls to ensure that things don’t get out of hand.
Process controls for the activities are accomplished many ways;
In listing these control criteria, our list of audit topics has grown quickly, and we must also consider some other controls which must be in place; – documentation controls, non-conformance, records generated from the process, corrective/preventive actions and improvements.
The challenge of preparing for any audit is the sequence in which to place these, so that we can gather useful information about the process, rather than just a number of facts, since creating a simple list of these topics is not as helpful. There are a number of ‘visual metaphors’ which have been used as tools to assist auditors. One unique approach has proven successful in helping auditors to organize these topics in an appropriate sequence – the ‘Football©’.
The use of this tool to ‘visualize’ the path an internal auditor should take when auditing a process has a number of advantages;
Comprehensive planning – so that all relevant controls are considered, in their correct sequence (the above is an example applicable to a manufacturing process). Structure to audit checklists or questions – they follow the appropriate process flow. This allows information to be gathered and used later to verify performance.
It can assist an audit manager with ensuring the assigned auditor (s) do the relevant research of those requirements and controls, so that they develop better understanding of them, before the audit interviews. The auditor has a ‘bigger picture’ to audit and is therefore more likely to see systematic issues.
Evaluation of actual process performance to the objective(s) as well as compliance of the QMS.
Better time management, adherence to audit scope etc.p>
By populating the various ‘bubbles’ (in the example) with the details of the organization’s management system and/or customer requirements etc., the auditor is able to get a clearer understanding of the expected outcomes. They are better able to identify opportunities within the management systems, as a result.
It is often easy for an internal auditor to be ‘drawn off track’ when evaluating the other criteria and controls (depicted by the football’s ‘laces’) which can affect a process – calibration for example – and the football assists the auditor in defining the ‘boundaries’ at which point they must decide to return to the normal process flow.
In review, conducting process based internal quality management system audits can be an overwhelming task leading only to a report based on compliance only. The use of a planning tool like the football, to map out an auditor’s strategy, leads to far more effective and efficient audits and focuses the auditor on validating the results of the process, to the plan.
In the next edition, we’ll take a look at which processes may be more ‘important’ than others and how to go about scheduling internal audits to consider them.
The core principle is to make it easy for the average person to worship.
12 Practical Tips For Worship Leaders Who Are Just Starting Out (and to those who’ve been doing it for years!)
1. Prepare as much as you possibly can. There are numerous benefits to being well prepared. It gives you peace of mind, confidence and calms the nerves. Remember the adage “prepare as if everything depends on you, pray as if everything depends on God.” Don’t just rehearse your set, also practice the presence of God.
2. Memorize the songs if possible, or big chunks of them. Practice until the music and singing is second nature. You’re training your brain’s muscle memory for your fingers and ingraining the tonal pitch center for your singing. This will free you up to be more spiritually sensitive and engaging with the congregation.
3. Transitions: Work on your transition game. Think through the songs so they flow smoothly. Practice the transitions between songs. Rehearse them over and over until they are clear in your mind. Visualize them.
4. Speaking: Write down what you’re going to say and where. Use bullet points. Rehearse talking and playing your instrument at the same time.
5. Be a good host. Imagine you’re inviting guests into your home. Be warm and welcoming. Then, take them on a journey that draws them closer to God.
6. Relax. Breathe. When we get excited the tendency will be to rush the tempo. Pace the songs at a sing-able tempo.
7. Be you. Don’t try to be like somebody else. David didn’t take out Goliath wearing Saul’s armor. Use your strengths. Don’t kill yourself trying to copy a song’s recording. Simplify your arrangements.
8. Use good time management. If your church has a tight time frame, rehearse using a stopwatch or timer. Work out the timings.
9. Get in the God Zone. For the days or hours leading up to the service, position yourself so you can receive from God. We minister from the overflow of the heart (Luke 6:45). So, sow to the spirit (Gal 6:8 ). Eliminate distractions. Try to organize your other responsibilities so you can be focused on this one thing. You may want to fast or eat lightly. Invest a little more time with God.
10. Pray. Pray for the congregation, the team, the pastor and message, and your role. God will work through you. Ask for intercessors to pray for you too. See also this post on discernment, The Standard Answer.
11. Warm up your voice. All vocalists should do this. Check out Vocal Coach for great voice resources.
12. Projection: Double check all the song lyrics with the projectionist and review the flow with him/her.
13. (BONUS!) Finally, bring your “A Game”. Lead clearly, confidently, and with authority. God has called you to this role, in this place and at this time. So, feed the sheep. Help the people in your community express their worship. They may not know how to do that until you show them. Model it.
By Rob Still
Some more information has come to light on the more than $7 billion “Whale Trade” derivative losses at JP Morgan—that total being comprised of an amount of over $6 billion in losses on the trade and a further amount of almost $1 billion in fines.
In an article on Bloomberg entitled JP Morgan’s Biggest Mistake, author William D Cohan provides us with somewhat of an insider’s overview on the problems that led to the Whale Trade losses—his sister-in-law sat on the Audit Committee. This article summarizes some of Cohan’s main points and identifies the lessons that auditors and other risk professionals should be learning in order to avoid making similar mistakes.
1. The culture within the organisation was such that senior trading managers not only refused to report the losses but they encouraged others not do so—that was until of course those losses became too big to ignore. As Cohan noted in his article:
The main lessons here are as follow:
a. Culture and values, rewards and incentives, fear and sanctions play the most important role in determining how and when rogue trading takes place, the extent of the delay in reporting losses, how those losses are reported as well as their ultimate size.
b. Fear and the perception of sanctions that might follow an error or mispricing are enemies of good banking. In general, human factors are more important than all others in establishing an appropriate and reliable management reporting framework.
c. Management should work to create a set of values within and throughout their banks that positively encourages the free flow of information at all times without fear of the consequences.
d. An effective whistleblowing policy is also essential for ensuring that everyone performs and reports issues in accordance with stated policies.
e. As a point of reference, it should also be noted that one of the problems at Lehman Brothers was that Dick Fuld was so powerful that his reporting managers were fearful of telling him things that he did not want to hear—until of course it was too late.
2. The article states that traders were allowed to misprice their trading portfolios within the bid offer spread. While this may be true, mispricing of a portfolio within the bid-offer spread is unlikely to cause $6 billion in losses. Instead, it is more likely that the greater portion of this loss was in fact due to the earlier reports of changes in the pricing and risk model used for valuing the relevant trades which in effect reduced the reported losses. The lessons for auditors and risk professionals are thus as follows:
a. Establishing appropriate validation and change control procedures over pricing and risk models are extremely important.
b. Risk management should document and explain any changes in pricing and risk models in terms of how they impact the firm’s position and p/l. These should be reported to senior management at the highest level with an explanation of why such a change is deemed necessary.
c. For major trading portfolios, the change(s) in 2 above should always be accompanied by an external and independent evaluation of the changes and should include an overall assessment as to the validity of or necessity for such a change.
d. More importantly and especially in the case of major trading portfolios, no changes in pricing and risk models should be made or accepted into the financial records without first obtaining the specific approval of senior management.
e. Generally, an external and independent validation of risk models should be performed on a periodic basis in order to ensure that their performance is consistent with previously established criteria.
3. The traders were the main source of pricing for the portfolios in question. JP Morgan has since instituted a procedure where three independent pricing sources have to be obtained. The lessons here are as follows:
a. Again, wrong pricing would be more likely to cause large losses than any mispricing within the bid-offer spread.
b. It has always been a cardinal rule that traders should under no circumstances be able to provide their own prices. How this was overlooked or circumvented within JP Morgan is very difficult to explain. Independent Pricing and Valuation or IPV is one of the bedrocks of modern product and risk control within banks.
4. The article notes that an early warning sign as to what was happening came when a demand of $520 million in collateral was made by the counterparties on the other side of the trades within the portfolio. This $520 million collateral demand was a much higher figure than the losses being reported at the time. The lessons here are as follows:
a. It is vitally important that management and operations control are able to reconcile in some way the demand for more collateral or margin payments with movements in the trading p/l.
b. In addition to the above, there should be controls that place management on notice for any large amounts of collateral transfers or cash payments to counterparties on behalf of a particular trader, trading portfolio or trading desk.
c. As a point of reference, it should be noted here that the Nick Leeson debacle at Barings was in a large part due to the fact that management was unable to reconcile margin payments and the demand for cash with what was happening on the trading floor.
5. There was a $237 million loss in one of the spreadsheets used by the traders. The lesson is:
a. The use of spreadsheets for pricing and valuing products should be kept to an absolute minimum—too many trading rooms are still too dependent on their use.
b. Spreadsheets should be subject to the same validation, change management and independent valuation controls as other pricing and risk systems (see 2 above). Some may argue that the controls over spreadsheet should be even more stringent due to their relatively insecure operating environment.
6. JP Morgan is being forced by the Securities and Exchange Commission (SEC) to admit wrongdoing. As noted earlier the bank has been fined almost a $1 billion and its former traders are facing criminal charges. What does this all mean?
a. In the post financial crisis era regulators and prosecutors are much less forgiving of any lapses in governance and internal controls.
Jonathan Ledwidge is the author of the book Clearing The Bull, The Financial Crisis And Why Banks Need A Human Transformation (iUniverse)
Whether the game involves competing every four years in the Olympics or every day in a business, winning brings advantages that make it easier to keep winning.
To understand sustainable success, I compared perpetual winners with long-term losers in professional and amateur sports and then matched the findings to business case studies for my book Confidence. The sports were a comprehensive mix including women’s soccer, men’s and women’s college basketball, major league baseball, U.S. football, international cricket, and North American ice hockey.
I found that winners gain ten important advantages as a result of victory — and that smart leaders can cultivate and build on these advantages to make the next success possible.
1. Good mood. Clearly everyone feels good about winning, while emotions sag at failure. Emotions affect performance. Positive moods produce physical energy and the resilience to persist after setbacks. While losers use any excuse to stop, winners sometimes play on even while injured, lifted by a kind of winners’ high. Moreover, psychologists find that moods are contagious. Winners’ exhilaration is infectious. Losers’ gloom can be toxic.
2. Attractive situation. Whether at children’s soccer games or in the office, losers go home early. Winners stick around. My studies show that there is less absenteeism or tardiness in organizations known for their successes. There is also more solidarity, because people spend more time together feeling good about what they can accomplish. More time together brings more chances for information-sharing and mentoring.
3. Learning. Losers get defensive and don’t want to hear about their many failings, so they avoid feedback. Winners are more likely to voluntarily discuss mistakes and accept negative feedback, because they are comfortable that they can win. Because they are confident about the possibility of winning, they see practicing as a route to a positive outcome, not as a punishment. For athletes, practice matters. Winning is often found in mastery of the details. As a former student found in studies of swimmers who did and didn’t qualify for the Olympics, excellence consists of examining and improving many small processes and routines.
4. Freedom to focus. As every golfer and tennis player knows, you must keep your eye on the ball. Losers often punish themselves in their heads. Winners have fewer distractions. Golf pro Tiger Woods won nearly every championship until hit with personal problems of his own making, which was followed by loses on the golf course.
5. Positive culture of mutual respect. For anyone who plays on a team, winning makes it easier to respect and listen to one another, because after all, if you win together, then the presumption is that everyone is a good player. Winners can maintain high aspirations and act generously toward others. Losers are more likely to blame others and disdain them as mediocre, creating a culture of finger-pointing and infighting.
6. Solid support system. Behind every high performance athlete or team is a cadre of coaches, friends, and fans that fuel motivation. Winning enlarges the circle of backers. Losing erodes support. For instance, the cheerleaders for one perpetually losing college football team used to leave the stadium at half-time. When even their cheerleaders feel they won’t win, how can athletes gear up for the next try?
7. Better press. It’s not just the buzz at time of victory that separates winners from losers, it’s also the more favorable story about the past and future. Winning provides a halo that makes everything seem to glow. Losing causes observers and analysts to probe for reasons in a rewritten version of the past that makes continuing losses seem inevitable.
8. Invitations to the best parties. Really. Winners get invited to the White House, Buckingham Palace, key conferences or exhibitions. They gain access to networks and relationships that confer benefits that maintain winners’ momentum, such as early information or better deals. Who invites the losers?
9. Self-determination. Winners have more control over their own destiny. “Why tamper with success?” we often say. Winners are left alone, getting a free pass on reviews (occasionally tragically, as at Penn State, where locker room abuse went uninvestigated). Losers get attention of the negative kind. They are encumbered with “help” — special committees, audits, reviews, frequent visitors. Enough of that, and losers spend their time in meetings instead of practicing and improving performance.
10. Continuity. Lose too often, and heads roll. New coaches, new strategies — like HP’s lurching between hardware and software or Yahoo’s parade of exiting CEOs. High turnover consumes time and attention. More time spent getting people on board leaves little time to fully execute any particular game plan. It’s hard to start winning again until the situation stabilizes. Winners have the luxury implementing long-term strategies and planning for orderly succession.
Winning streaks eventually end because winners can get over-confident, slipping into arrogance or complacency, or because the competition gets better. But leaders can build on the advantages of winners to encourage a positive spirit, disciplined focus, mutual respect, lots of practice on the details, and lasting support systems that can make successes and comebacks more likely.
Editors note: Tony Schwartz thinks our culture has an unhealthy obsession with winning. Do you agree? Read his post and let us know what you think.
Every instrument needs love, care, maintenance, and things that just plain cost money.
Good musicians are continually looking to improve on how they play. Good music and worship pastors should be continually looking to approve on how they think.
Music and worship pastors are constantly on the lookout for new and good music.
Has your worship or music pastor written a lot of music for the church?
Many local worship and music pastors might not have someone in their life that is a musical (or even spiritual) mentor.
My absolute favorite gift of appreciation I’ve ever received was this piece of artwork that a piano player I worked with made specifically for me. She took a picture of my hands playing the guitar, sketched it, and then used wood pieces to create the amazing matte. Thanks, Pam. I know you’re reading and I cherish this piece of art every day.
By Ryan Egan
Strategy #6: Advisory or Consulting Engagements Can Be “High Impact” Too
The events of the past decade — Enron, WorldCom, Sarbanes-Oxley, and the global financial crisis, among others — have enhanced recognition of the fact that financial controls are important. But value-added consulting engagements such as assessment services, facilitation services, and remediation services also can add value and improve an organization’s operations in a big way. Consulting engagements are likely to be high impact because they generally are the result of management requests for needed services such as counsel, advice, facilitation, process design, and training.
Assessment engagements are those in which the auditor examines/evaluates a past, present, or future aspect of operations and renders information to assist management in making decisions. Examples of these engagements include assessing the risk of a physical security breach, evaluating a proposed reorganization plan, assessing proposed internal controls, or estimating total costs of decentralized acquisition.
Facilitation services are those in which auditors assist management in examining organizational performance for the purpose of promoting change. In a facilitation role, auditors do not “judge” performance. Instead, we guide management in identifying organizational strengths and opportunities for improvement. Examples include strategic planning support, business process reengineering support, benchmarking, performance measurement, and control self-assessment.
Remediation services are those in which the auditor assumes a direct role designed to prevent or remediate known or suspected problems on behalf of a client. Examples include developing and delivering training courses, reviewing or drafting proposed policies or systems, and augmenting operating personnel.
From Richard Chambers, CIA, CGAP, CCSA