An Overview of Technical Audit

Business organisations that are involved in different industries require financials, projects, processes, and databases, among other things, to be audited and approved as efficient for long-term operations. Such audits help avoid unsafe and unethical practices, financial fraud and embezzlement other things. An audit is generally considered to examine an organisation’s financial statements to ensure accuracy.

However, technical audits or something different that are applicable to specific industries. Most multinational companies which have complex international supply chains and even smaller businesses with high manufacturing costs are turning towards vendors that are low cost to meet their manufacturing needs.

These common cost vendors mostly have lower quality, manufacturing, sourcing and delivery process. Since companies are required to work with a range of vendors spread across territories, it is imperative to have in place acceptable and consistent standards while working with these vendors.

Before placing an order with a vendor, it is prudent to ensure that the manufacturer has the requisite infrastructure, processes, systems and competence to fulfil the requirements of the company. It is advisable to make sure that all the applicable international and local standards of safety and quality are maintained consistently by all the global and local vendors of the company fall through the manufacturing and delivery process.

A technical audit is an objective and independent assurance to evaluate the efficacy and efficiency of an organisation’s operations. The actual purpose of a technical audit is not to assess accuracy but to ensure compliance and to make sure that applicable standards are being followed, which should ultimately provide accuracy.

It is a thorough assessment of the manufacturing processes of a vendor and the quality control systems in place to assess the competence of the facilities and machinery, among other things, of the manufacturer and whether the manufacturer can meet the specific requirements of a company. A technical audit is a comprehensive evaluation to assess the capacities and capabilities of a supplier.

It gives a company extensive visibility as to how a manufacturer will be able to meet its requirements pertaining to quality introduction. It also helps reveal how proactively the manufacturer shall manage the many aspects of the production process. Results from these audits can help companies to make an informed decision before placing an order with the supplier and to get an idea of the operational, ethical and quality risks that might be involved.

Role of a Technical Auditor

Technical audits are conducted by either engineers or subject matter experts by evaluating and investigating the systems, processes and procedures in place to assess or identify areas of improvement or discrepancies. The auditor will determine the existing deficiencies or areas of risk or where the system or process can be improved.

Technical audits help cover technical aspects of a procedure or project implemented and organisation. A technical auditor is required to have an in depth knowledge of the subject matter unit development, design, algorithm updates and security standards, among other things.

The primary duties of a technical auditor are as follows:

• Evaluation
• Preparing reports along with recommendations and findings for the top management of the organisation
• monitoring the implementation of improvements and corrective action plans to remove discrepancies and gaps in performance.
• Evaluating internal compliances, established policies and standards
• inspecting and auditing of materials, processes, and systems, among other things, in accordance with technical specifications and descriptions.

Objectives of a Technical Audit

A technical audit can be conducted for the following reasons:

• To ensure that every technical requirement is fulfilled and the required standards armet while performing various processes or tasks.
• Technical audit of suppliers products and procured materials is conducted to make sure that all the technical specifications r at par with the requirements
• assessing internal controls to identify any discrepancies and to ensure compliance with existing regulations and standards.
• To get assurance about the compliance of operations with the organisation’s policies and applicable standards.
• To evaluate whether technical operations are being performed as required.
• To assess whether the framework of sound control is in place to prevent and avoid potential risks.
• To check whether technical equipment is suited to the purpose for which it was procured.
• To ensure that authority and responsibility for operations have been assigned properly.
• To check if the information system is sufficient to provide assurance of proper conduct of operating activities

A technical audit majorly focuses on the below mentioned:

• Planning and design aspect of the project: This pertains to the demand analysis and need analysis of a technical audit. The questions that shall be asked during the planning stage shall include the scope of the audit, how the audit will be conducted, and the exercise of quality assurance measures. The experience of the auditor in the field of the subject matter that is being monitored shall also be the point of consideration. It shall also include preparation of authorisation and technical specification, quality assurance, and assessing the experience of the vendor required by the project.
• Purchase or procurement: The auditor shall check compliance of procedures and procurement methods with the financial manual and conduct an independent assessment and evaluation of the proposals received from different suppliers without any bias or coercion.
• Implementation: Evaluating whether the project is being completed within the given timeline. When situations of non-compliance arise, the provisions for relief in cases where the project completion is delayed shall also be evaluated. This stage of the technical audit shall also check the project completion is in accordance with the applicable standards. The acceptance test report is a crucial Document.
• Project impact: The auditor shall evaluate the full impact of the project. It shall be assessed considering various aspects like set goals and expectations along with improvement of KPIs or key performance indicators. At this stage, the auditor shall suggest ways to increase market share, increase or decrease in customer loyalty, reduce or improve operation costs, and increase the revenue of the company, among other things.