By Peter Holtmann
Performing global audits or international audits can be tricky. Culture, trust, risk, error, and competence are key factors in these situations, and they can determine if an accurate outcome is delivered.
A recent business negotiation led me to consider just how reliable audits are when performed globally or internationally. During the negotiation what seemed to be normal operating practice and examination or interrogation of results became the sticking point to the progression of the business. What I thought would lead to a set of frank discussion points became more about me than the topic itself.
This experience led me to research global audits and to review papers by peer organizations that focused on decision making versus culture. I found the issue isn’t confined to management systems auditors. Indeed, professions such as finance, insurance, project management, and engineering experienced similar concerns.
Let’s start with some basic concepts—global versus international. There is a difference—international being a company that manages remote offices in a limited number of foreign locations. In these situations, all power and decision making is performed at the head office.
Global, on the other hand, speaks to a dissemination of power to autonomous businesses or franchises in multiple foreign locations. Here, the use of power and distance will affect the outcomes of an audit. It can also be argued that the further from the source of power, the more likely that risk or deviation to compliance practices will occur. This includes the act of auditing practice.
Global expansion brings with it the spread of cultural differences between audits, auditors, and competence. Consider if you will, my style of auditing: I search for data, make some direct assumptions, and challenge the auditee on the findings to determine their understanding of the process and allow them to demonstrate how they control outcomes. My style may be more direct than others, but I still perform in a respectful manner.
This approach is not viewed similarly around the world. Losing face in front of colleagues and being confrontational is not regarded as acceptable practice in many cultures. Challenging the person against data or process outputs may not be acceptable, and auditors may accept data on face value.
So how do you make a clear decision or judgment call on your findings and reach an agreed viewpoint? This proves challenging when the auditee prefers to agree, but disagrees to reach a finalization of the audit process. More important, which opinion or condition prevails here? In an international business it would be fair to assume that the opinion of head office prevails; however, in a global business the local conditions and customs override the corporate dogma.
I am uncertain if there is a direct line of approach through this; however; auditors should use their best judgment combined with a risk analysis.
This leads to the topic of risk and understanding if there is a shared level of risk among the global auditor community. Given my recent experiences, I would say that I uncovered some practices that were illegal or extremely high risk. These were known to the auditee, yet were not corrected or acted upon. It was felt that the risk was not as severe and that it was being used as leverage. Here is where a second or third opinion helps diffuse the situation.
This is a good segue into the topic of mixed global audit teams. It would seem prudent that when auditing globally that your team of auditors is comprised from global sources. This should at least counter for cultural variations and risk appetite.
Given that you have made the decision to create a global team, how do you make an audit team “gel” given the diverse backgrounds and assumed competence? You need to establish trust among the team and, in many cases, overcome some immediate prejudices.
Here, knowledge base, experience, accuracy, and belief systems will be challenged. Taking orders from a lead auditor may not be a natural act in some cultures where you only take instruction from your direct superior. Gaining this permission may prove challenging.
Trust often comes from repeated use of the team and understating the acceptance of errors and omissions when reporting findings. I can recall as a very young auditor working globally and having to report back to an audit program manager in another country. Their idea of accurate audit reporting was to write a 99-page audit report, right down to a “he said, she said” diatribe. In this way, the auditee and reader of the report could make up their own mind about the accuracy of my work. This was very confrontational.
I am challenging the norm of global audits delivering consistent outcomes and how valid some outcomes prove to be. My own recent experiences and more than 15 years of auditing abroad would tell me that the audit should be used as lane markers for more prolonged oversight of foreign operating conditions.
It’s not just about trust; it’s about calibrating your expectations of an international partner or provider.
I feel another global Exemplar Global research project coming on, but until then I warmly welcome your experiences on this topic. How do you find the experience of auditing globally?
About the author
Peter Holtmann is the president and CEO of Exemplar Global Inc., the premium provider of personnel certification and credential management and independent certification for training outcomes.
Peter has been passionately dedicated to the conformity assessment profession for 20 years, spending the last 10 years building Exemplar Global into a world-class certification organization. As the industry has changed so has Peter’s role, from a scientific professional to trainer and risk consultant, from auditor to business developer, and now as a strategist and leader of a global non-profit organization.
Peter sees his role as an advocate for credentialing that helps drive career pathways to international recognition. He believes unilateral acceptance of a person’s capabilities across cultures, countries, and continents builds world trade and fosters global growth of human capital.
TAG: global audits.