5/25/23

Internal Audits
Compiled by S. G. Deshpande

Definition of Internal Audit

Internal audit is an independent, objective assurance and
activity designed to add value and improve operations.
It helps an organization to accomplish its objectives.
by systematic evaluation of risk management, control and
governance processes and improves effectiveness of training

Compiled by S.G.Deshpande 1

Internal Audit
• Effectiveness: Internal Audit is more effective because it can check the
system thoroughly and fearlessly (compared to external auditor)
• Frequency: Internal audit takes place at least once a year. Sometimes more
often. For ship – ext. audits of ISM may be once every 2.5 years.
• Self-check :Internal Audits are a Self check (Company’s own audit dept.)
• Does not affect certification.
• Improvement:
ØClose scrutiny of systems.
ØIdentify areas for improvement in operations, records, processes.
ØImprove training, exercises, compliance with new regulations etc.

Compiled by S.G.Deshpande 2

How to do an internal audit?

(Steps in the internal audit)

1) Audit Planning.
ØWho will audit.
ØAuditees? Schedule of audit ( ISM int. audits?..., when, where )
ØInform auditees ( Surprise means we don’t trust you)
ØPrepare : Which areas / processes will be audited? (auditee)
ØScope of auditee / audit area. (Extent, limits)
ØNote points from previous ext audit/ int audit
ØFrom System (SMS, QMS) manual, write job description of process owner
ØStudy manual for other important functions

Compiled by S.G.Deshpande 3

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2) Conducting the audit.

Ø Opening meeting ( Explain purpose of audit)
Ø Ask questions
Ø Be polite but firm
Ø Audit trail
Ø Inform auditee of CAR / NCs

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3) Closing the audit

Ø Closing meeting
Ø Explain limitations of sampling basis
Ø Reporting / Explaining NCs, observations
4) Records
Ø Audit report
Ø N/C , observation reports in correct forms : identify and record corrective
actions to be taken
Ø Follow – up audits / communication
Ø Closing of N/C .

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Closing N/Cs
• N/C during DOC audit: Office personnel should investigate and
analyse the non-conformity aiming to identify the root cause.
Afterwards, an action plan on how to correct the non-conformity
should be decided as well as all actions need to be taken in order to
prevent similar reoccurrences.
• N/C during shipboard audits: corrective actions should be decided
between the Master and the Auditor, but the DPA (Designated Person
Ashore) should finally review the incident and proceed, if appropriate,
with modifications. Also, for vessel related non-conformities, it is
necessary to communicate the preventive actions to the whole
fleet.

Compiled by S.G.Deshpande 6