The problem of quality is a topic that has been developed in multiple investigations, fundamentally in tangible goods and through the establishment of norms that regulate its operation and control. As in quality control, the lack of planning and prevention is the norm in many companies regarding both the control and the actions of the Audit.
An important aspect to question in the audits is that it be perceived as an entity dedicated only to inspection, and not to advice with the aim of protecting and improving the operation of the organization. It is necessary to conform a new vision of the Audits with a systemic approach, in such a way to locate it as a component of said system, in charge of protecting the proper functioning of the internal control system (subsystem at the company level), but also to safeguard the good operation of the company for the purposes of its survival and achievement of the proposed goals.
In the new vision of auditing, it must be integrated into Total Quality Management, making full use of the different instruments and management tools in order to achieve higher levels in the provision of its services. The present work is aimed at highlighting the importance of linking quality issues to the Audit service provided by any audit institution or auditing firms.
Concepts and Evolution of the term Quality.
Quality as a term of great importance arises from the fact that entrepreneurs or merchants, as they were previously called, realize the need to compete in the market with their products or services. Obviously this element and its concepts have evolved over time.
Different authors have referred through the study of quality as a requirement of a product or service to guarantee its competitiveness and permanence in the market. We will mention some as an example:
- "Meet Specifications" P. Crosby, "Fitness for Use, Satisfying Customer Needs" J. Juran, "A Predictable Degree of Uniformity and Reliability at Low Costs, Appropriate to Market Needs" EW Deming, "An Effective System to integrate the efforts to improve the Quality of the different groups of an organization, to provide products and services at levels that allow customer satisfaction ”AV Feigenbaum, Quality as a Loss Function. G. Taguchi.
We can then define quality as the degree to which a set of inherent characteristics of a product, system or process meets the requirements of customers and other interested parties. Quality is not: quality circles, using “some” tools or having a set of procedures written.
Historical evolution of the concept of quality
Throughout history, the term quality has undergone numerous changes that should be reflected in its historical evolution. To do this, we will describe each of the stages, the concept of quality and what were the objectives to be pursued.
Stage Concept Purpose
Artisanal Do things well regardless of the cost or effort required for it.
- Satisfy the customer Satisfy the craftsman, for a job well done Create a unique product.
Industrial Revolution Do a lot of things no matter that they are of quality
(Production with Quality is identified).
- Satisfy a great demand for goods. Get benefits.
World War II Ensuring the effectiveness of weapons regardless of cost, with the highest and fastest production (Efficiency + Timing = Quality) • Guarantee the availability of effective weapons in the right quantity and at the right time.
Post-war (Japan) Doing things right the first time
- Minimize costs through Quality Satisfy the customer Be competitive
Post-war (Rest of the world) Produce, the more the better • Satisfy the high demand for goods caused by the war.
Quality Control Production inspection techniques to prevent the departure of defective goods.
- Meet the technical requirements of the product.
Quality Assurance Systems and Procedures of the organization to prevent defective goods from being produced.
- Satisfy the customer, prevent mistakes, reduce costs, be competitive.
Total Quality Theory of business administration focused on the permanent satisfaction of customer expectations.
- Satisfy both the external and internal customer Be highly competitive Continuous improvement
This evolution helps us understand where the need to offer a higher quality of the product or service provided to the customer and, ultimately, to society, comes from, and how little by little the entire organization has been involved in achieving this end. Quality has not only become one of the essential requirements of the product, but it is currently a key strategic factor that most organizations depend on, not only to maintain their position in the market but even to ensure their survival..
Quality in the Audit
According to the management groups of Japanese companies, the secret of the most successful companies in the world lies in having high quality standards for both their products or services and their employees; therefore total quality control is a philosophy that must be applied at all hierarchical levels in an organization, and this implies a process of Continuous Improvement that has no end.
Consideration that said process must be: economic, that is, it must require to carry out this Continuous Improvement process, it must be taken in less effort than the benefit it provides; and cumulative, that the improvement that is made allows to open up the possibilities of successive improvements while guaranteeing the full use of the new level of performance achieved.
What does Continuous Improvement mean to achieve quality in the processes?
James Harrington (1993), for him, improving a process means changing it to make it more effective, efficient and adaptable, what to change and how to change depends on the specific approach of the entrepreneur and the process.
Fadi Kabboul (1994) defines Continuous Improvement as a conversion into the viable and accessible mechanism by which companies in developing countries close the technological gap they maintain with respect to the developed world.
Abell, D. (1994), gives as a concept of Continuous Improvement a mere historical extension of one of the principles of scientific management, established by Frederick Taylor, who affirms that every work method is capable of being improved (taken from the Course of Continuous Improvement dictated by Fadi Kabboul).
Eduardo Deming (1996), according to this author's perspective, total quality management requires a constant process, which will be called Continuous Improvement, where perfection is never achieved but is always sought.
Finally we can affirm that Continuous Improvement is a process that describes very well what the essence of quality is and reflects what needs to be done if you want to be competitive over time.
The importance of this management technique lies in the fact that its application can contribute to improving weaknesses and strengthening the strengths of processes and entities.
The search for excellence comprises a process that consists of accepting a new challenge every day. Said progress must be progressive and continued. You must incorporate all the activities carried out in the company at all levels.
Advantage
1. The effort is concentrated in organizational areas and specific procedures.
2. They get improvements in a short term and visible results
3. If there is a reduction in products, in our case we say defective processes, which results in a reduction in costs.
4. It increases productivity and directs the organization towards competitiveness, which is of vital importance for current organizations.
5. Contributes to the adaptation of processes to technological advances.
6. It allows to eliminate repetitive processes. Important when it comes to Audits.
Over the years the Audit has been worked by its practitioners, as well as by the supervisory entities, setting only limited goals, which have prevented them from seeing beyond their immediate needs, that is, they only plan short-term results and on the other On the other hand, there are no defined quality criteria to measure whether the results achieved have optimal levels of this and, therefore, the absence of these essential criteria means that work is not oriented towards obtaining results that allow credibility and high profitability.
The European community has already spoken out for the quality requirements in the audit, according to the conclusions of the Lisbon European Council, the Commission of the European Communities and the Audit Committee of the European Union published a Communication entitled "The strategy of the European Union in the field of financial information: the way forward », which underlines the importance of the highest level of uniformity in the audits carried out throughout the European Union and also spoke out because the Member States adopt measures that guarantee that all the people who carry out audits are subject to a quality control system.
The term "persons" corresponds to the employee who performs statutory audits (account auditors). Currently not all people who carry out statutory audits in the European Union are subject to a quality control system. They also state that quality control of statutory audits is essential to ensure their good quality. The good quality of the Audits results in a greater credibility of the published financial information and in a better protection of shareholders, investors, creditors and other holders of securities and affirm that the opinions of Audits in the European Union must give a minimum level of guarantees about the reliability of financial information.It could then be argued that Member States should have taken steps to ensure that all statutory auditors performing Statutory Audits are subject to a quality control system.
These aspects allow us to realize that the subject is being worked on and dealt with in the international community and positions on it are already being assumed.
Defining the quality in the performance of the Audit is also an aspect of vital importance in the economic and business world according to current trends, since it means the assurance that these have been carried out in compliance with the principles and standards established for its exercise, in addition to the importance of checking and evaluating the correspondence of the opinion with the real situation of the audited entity. This issue has constituted a need identified worldwide by the different audit entities, given the situations that have arisen and which have put the criteria and work carried out by auditors in crisis, generating a deterioration in their prestige and independence, caused for corruption and other types of fraud.In the national context, the Ministry of Audit and Control has ruled on the need to design a procedure to determine the reliability and quality of the work carried out by its auditors.
The quality requirements will ensure a correct conception of the Audit and will lead it to achieve the fullness and development of its full potential. This imperative arises from the growth phase of the activity, in which it is framed in our country, so aspects related to the conditions for its development and permanence must be present in any review of the auditor's work in order to lead him towards a path of trust and credibility in his work, giving him prestige before society.
Most of the countries of the so-called “Third World” and, especially, the Latin American economies, are going through an increasingly difficult situation in the context of the world economy.
Development, to a certain extent uprooted from its national needs, has practically turned, in a chimera, the yearnings to establish a new, true and fair international economic order, which has become a globalization, predominantly neoliberal, of markets and economies, with dire consequences for these countries. Therefore, current times require, above all, a political will not to blindly subject economic decisions to doctrines and "neoliberal recipes", as well as the clear definition of a strategy that is based on the progressive increase in the competitiveness of the business sector, for which it is necessary to develop the “domestic skills” to select, assimilate and transform technologies, while continuing to generate other indigenous ones.
Cuba has not been oblivious to all the transformations that have taken place in the business field worldwide, but developing its own economic model and its strategies, without taking into account the recipes of the current world that travel from one part to the other to underdeveloped countries and of economy absolutely dependent on the developed ones.
For this reason, Cuban companies that produce goods or services are in search of higher goals to achieve in their results, advocating to establish quality parameters already established or to be established.
The Audit has long been busy establishing itself and has not had much room for internal analysis; At this time, he has achieved a degree of maturity that does not allow him to ignore an introspective that considers aspects that require attention and that primarily guarantee the quality of the auditor's work in order to lead him towards a path of trust and credibility in his work, giving him prestige before the society.
The audit is a systematic process to obtain and evaluate evidence, this requires the auditor, a set of logical and organized procedures that, even when they vary according to the case, must follow general parameters that allow for quality work, making this a constant concern and permanent auditor.
The evolution of the audit function has not stopped in recent years and its powers and responsibilities are increasing. The road traveled is long, today it is next to the highest level of management and informing it, which places it facing great challenges.
Auditing is an important part of management control. When an evaluation of the results of this is required, the work of the auditors can be used to provide reasonable assurance that management controls are functioning properly.
Quality is essential in the development phase of an audit system, since it offers reasonable assurance that the audit service maintains the capacity to carry out its functions efficiently and effectively, and thus achieve a high level of credibility and confidence in the face of management, auditors and society. You can enter to analyze various parameters that must be considered in the quality of the audit.
From the experience that is accumulating day by day it is surprising the serious deficiencies that companies suffer in terms of auditing and internal control, including not only small and medium-sized companies, but also large companies, for this the famous example is enough the case of Barhing Bank, or that of large state-owned companies.
Firstly, we must underline the lack of compliance with the basic and fundamental rules on internal control, but on the other hand, there is the lack of broad concepts regarding the heritage to protect, and the methods and instruments of analysis to be used. by internal auditors.
As in quality control, the lack of planning and prevention is the norm in many companies regarding both the control and the actions of the audit. Therefore, it is not surprising to see the auditors trying to analyze what went wrong, why, and what to do to avoid their repetition, when the right thing is to act preventively, and if some detrimental event occurs, do not stay in the most superficial aspects. but to go deeper until reaching the root cause, trying to unravel in such a way the reasons that led the system to generate these shortcomings.
Another important aspect to question in audits is that it is perceived as an entity dedicated only to inspection (and sometimes even with a police perspective), and not to advice with the aim of protecting and improving the operation of the organization. It is necessary to conform a new vision of audits with a systemic approach, in such a way to locate it as a component of said system, in charge of protecting the proper functioning of the internal control system (subsystem at the company level), but also to safeguard the good operation of the company for the purposes of its survival and achievement of the proposed goals.
In the new vision of auditing, it must be integrated into Total Quality Management, making full use of the different instruments and management tools in order to achieve higher levels in the provision of its services.
The problem of quality is a topic that has been developed in multiple investigations, fundamentally in tangible goods and through the establishment of norms that regulate its operation and control. Until today, marketing, and particularly that of services, has not given in our country the weight that the quality with which services must be provided should have, let alone the possibility of using it as a differentiation strategy, especially when it is presented as a decisive tool to ensure that the services we offer are perceived in a similar way by the client, with respect to those of the competition.
The services sector has been acquiring increasing importance in the economic set of most nations. Both in volume of activity and in employment figures, it is the most important and most dynamic economic sector. Although the measurement of production in services is more difficult than in industry or agriculture, and activities tend to be more informal, which may lead to an underestimation of the importance of services around 60% of GDP in most of the countries. Developed countries come from the tertiary sector (trade and services) and a similar proportion of the employed population works in this sector. Furthermore, these proportions have not stopped growing in recent years.
The services have differential characteristics that constitute the main reason that justifies the study of Total Quality in the Management of Services, some differences of the services with respect to tangible goods pose considerable problems for the evaluation of the total quality and makes it necessary to apply methods specific for it.
The strong competitive pressure that is registered at present, makes companies have to use the quality weapon to retain their clients and get new ones; And this, which is true for all types of companies, is much more true for service companies.
It should be borne in mind that the service must be provided well from the first time, since there can be no waste; A faulty service cannot be resold in a second-hand market, nor can it be repaired. For this reason, it is necessary to study in depth how to improve the quality of services in order to properly serve potential customers, loyalty to their purchase or service and, in turn, acquire competitive advantages compared to competing banks.
Sometimes specialists are heard saying that they do not know how to differentiate their services from those of the competition.
The importance of service quality as a differentiating factor is so great that it must be subject to rigorous and systematic control, which detects any insufficiency or inadequacy in the provision of services.
But this quality is a subjective phenomenon and, therefore, difficult to measure, since it is based on the perceptions and preferences of customers or users and is the difference between what they expect to obtain from the service and what they actually obtain, reason why it is stated that one of the main ways of differentiating the services of a company is to consistently provide a quality of service superior to that of the competition.
Audit Organizations must have an appropriate Internal Quality Control System and must be the target of an external quality review program.
At the present time, it is necessary to streamline the work of the audits, making the quality standard play an important role, which is why the work must be aimed at determining whether:
- The audit organization supervises the activity in all stages of work, therefore it requires the supervisor to participate in the exploration or preliminary examination, supervision and review, stage of legal provisions and other regulations, stage of administration controls, Internal Control, stage of evidence and analysis of the Financial Statements. Must enforce the Applicable Standards of Auditing. The reports are made with quality and that the documents that support it also have this quality; the reports must be clear, precise, without misspellings. Due to the importance of the quality of the audit service, as a differentiating factor it must be subject to rigorous and systematic control,which allows detecting any insufficiency or inadequacy in the provision of services The audit organization performs the reviews previously expressed to the auditors of the Divisions that are subordinate to it in order to check at least once in each Audit.
Then, the quality review in each Supervision is imposed, either by the Group Leader or by Supervision, without this being limited to these, in a certain way it can be carried out by the Auditor, it would be very feasible to achieve improvements in his work, and why not in his personal evaluation.
Responsible:
- Audit Department Supervisor Group Head Auditor
Standards;
It consists of a Guide, with certain aspects to evaluate.
Each stage, in turn, breaks down the evaluation for certain aspects.
It concludes with a final evaluation.
At least once a year, the quality of the Auditors, Group Heads, Supervisors, and Head of Unit must be evaluated.
Recommendations:
- The Evaluative Guide to Audit Quality must appear in the Audit manuals of all the Organizations dedicated to conducting audits. Formalize a Standard Document for such purposes, which must be adapted to the conditions of the Organization.
