ASQ Energy and Environmental Division

ManagementSystems Beyond

Today’s HorizonRobert H. KingSept. 13, 2004

Today’s Agenda

• RAB value statement

• How RAB must change and stay true to the mission

• New ways of doing business

• Issues in today’s world

RAB Visionand Mission

RAB Vision

RAB will be an acknowledged leader:• Guiding the international

development and implementation of accreditation and certification processes that build confidence and value for stakeholders worldwide

• Providing the most professional, value-added services for its customers

RAB Mission

• Value-added, cost-effective provider of CA services

• Advance credibility of CA

• Establish mutual recognition agreements that advance acceptance of CA activities

• Recognized leader in continually improving CA processes

RAB Background

• Financially self-supporting non-profit organization in Milwaukee

• Governed by 17-member board representing EMS and QMS

• Exists to serve conformity assessment needs of business, registrars, course providers, and individual auditors

Organizational Relationships

ANSI ConformityAssessment Policy

Committee

RAB Boardof Directors

ANSI-RABNational Accreditation Program

Joint Oversight Board

Accreditationand Certification Board

QMS Council

EMS Council

AccreditQMS

Registrars

AccreditEMS

Registrars

CertifyQMS and EMS

Auditors

Accredit QMSand EMS Course

Providers

Certification Services(Administered by RAB Staff)

Accreditation Services(Administered by ANSI

and RAB Staff)

ANSI-RAB NationalAccreditation

ProgramRAB• Operating partner

for programs• Coordinates initial

accreditation audits and ongoing surveillance audits of registrars

ANSI• Provides due

process and public review of program criteria and procedures

• Promotes NAP and represents it internationally

• ANSI-RAB agreement does not meet the “legal entity” requirement

• Both accreditation (CRBs) and certification (auditors) in the same organization

IAF Concerns

How This Will Change

• ANSI-RAB NAP will change identity

• New businesses of accreditation will emerge

• Former partnership with ANSI will become legal entity

Options for Future of

Auditor BusinessFind cooperative partner

•PossibleBuy competitor

•ExpensiveInch forward with core business

and expand by new business introduction•Impractical

QSA International

• Quality Society of Australasia Ltd.

• Established in 1989 as professional society

• Not-for-profit company limited by guarantee

• Based in Sydney with JV offices in Hanoi, Kuala Lampur, and Auckland, with representation Hong Kong, China, and India

First Step to Merger

Agreed objective: To exploit, develop, and profit from the international personnel certification and training accreditation markets, achieving the status of “company of first choice” for persons seeking recognition and professional development.

RABQSA International

• Incorporated in U.S. as 501(c)(6)• Principal centers USA and

Australia with international joint venture offices

• Single board, business plan, market

• ASQ will be only member

• ISO/IEC 17024 accredited• Priority markets: core and

developing economies

RABQSA International

• QSA and RAB boards approved• Agreement signed in June• Interim board established• Bylaws drafted• Business case complete• Plan in place for reorganization

under tax exempt status

New Business Processes

• MCAA

• Value-added assessments

• Auditing post-Enron

• Trends in auditor competence and RAB’s direction

MultilateralCooperative

AccreditationArrangement

Multilateral Cooperative

Accreditation AgreementIAF Guidance on Cross Frontier

Accreditation: “Defined arrangements between IAF MLA signatory ABs are also necessary to meet the requirements of clause 2.1.3 of ISO/IEC Guide 61, e.g., through subcontracting arrangements and arrangements for joint assessment activity.”

MCAA Purpose

• To provide for the recognition

of the acceptability of the

results of each party’s

assessment and accreditation

program based upon the

determination of equivalence

MCAA Scope

• Covers accreditation programs for certification bodies of management systems for QMS, EMS, QS-9000, AS9100, TL 9000, and RC 14001, and does not include any other accreditation program administered by any of the parties

MCAA Implementation

• Initially signed by JAB (Japan) and ANSI-RAB NAP (United States) in September 2003

• JAS-ANZ (Australia and New Zealand) subsequently signed in December 2003

• SAI Global jointly accredited by NAP, JAB, and JAS-ANZ in June

MCAA and Cross-Frontier Guidance

• Method by which ABs can meet requirements of cross-frontier guidance

• MCAA formalizes network of ABs required by cross-frontier guidance

• Method of ensuring that ABs in developing countries are engaged

MCAA ManagementSystem Highlights

Initial accreditation audits• In lieu of full system office or

witness audit, AB may consider reviewing previous audit reports of CRB’s AB

AND• Conduct abbreviated audits with

emphasis on Advisories (where applicable) and results of off-site document review

MCAA ManagementSystem Highlights

Re-accreditation and surveillance audits

• ABs cooperate with other signatories to agree upon a surveillance and re-accreditation program for each mutually accredited CRB

• Eliminating redundant audits takes cost out of the system

Advantages for CRBs

• CRBs that are mutually accredited by MCAA ABs would immediately realize reduced audits and dollar savings

• CRBs will find that reclassification to avoid the critical office clause is unnecessary

Advantages for CRBs

Three CRBs mutually accredited by NAP, JAB, and JAS-ANZ

• This could immediately assist the three CRBs by reducing audits

• Savings to CRBsFive more CRB offices accredited

by NAP, JAB, and JAS-ANZ• This could assist CRBs under cross-

frontier policy

MCAA Advantages

• Provides for harmonization of processes

• Provides for AB member auditor training

• Requires member ABs to be signatories of IAF MLA

• Requires participating CRBs to agree to shared information

• Increases oversight information to member ABs

Improving Integrityof AB Programs

Language barriers eliminated• International audits conducted

by auditors who speak and read the language

Confidence in other ABs’ work• Annual audits of ABs will ensure

AB network’s confidence in each other’s processes

Improving Integrityof AB Programs

Plethora of info on accredited CRBs

• CRBs must sign release to allow ABs to share information on audit results, complaints, appeals, issues, etc.

Flexibility to not work with AB even though it’s MLA signatory

• If initial audit of AB is unsuccessful, AB network could decline to sign MCAA with that AB

Value-Added Assessments

Value-Added Assessments

Elements that add value:

• Effectiveness

• Efficiency

• Cost reduction

• Waste elimination

• Risk management

• Control

Skills to Enhance Trust

How to enhance confidence people put in auditing and CA scheme

• Be open and honest• Communicate clearly• Provide outstanding service• Do better understanding and

addressing needs• Demonstrate industry leadership

Leadership Skills

Most important leadership qualities:

• Assume personal responsibility• Show care and concern for

customers• Stick to code of ethics• Communicate openly• Handle crises better

AuditingPost-Enron

Auditing in thePost-Enron Age

• Reaffirms importance of avoiding conflict between auditing and consulting

• Illustrates how quickly trust can be replaced by skepticism

• Need to see increased attention as upside of Enron collapse

Auditing vs. Consulting

• Perception of risk to auditor’s independence can damage company

• Enron dramatizes need to focus on auditor independence, potential for conflict of interest

• Shareholders more inclined to apply pressure

Auditing Post-Enron

• Need more than checklist audit

• Value a function of professional independence and impartiality

• Well-crafted nonconformity statements indicate value of work performed

Trends InAuditor

Competence

ISO/IEC 17024

• Management systems standard for personnel certification bodies

• Competency-based requirements will replace current qualification-based approach

• RABQSA International will offer truly global option for accredited certification

International Market

• Our product• Target market• Sales strategy• Market delivery strategy• Service strategy• Product R&D

International Market

Our product

• Accredited personnel certification

• Training provider accreditation

• Professional development

• International registers

Current DriversExample: MS

Auditing

capabilities

purpose

identity

values and behavior

audit management system

auditor

inspection and compliance

technical auditing skills

service environment (market)

compliance auditing

New (Competency)Drivers

capabilities

purpose

identity

values and behavior

improve business performance

improver and facilitator

value and relevance

business improvement skills

service environment (market)

business improvement

International Market

Target market - industry segments

• Conformity, risk assessment – MS auditor certification

• Professional certification – consultant, BI specialists, managers

• Trade certification• Industry specific certification

International Market

Market

"engagement of persons independently certified by RABQSA provides you with the confidence and assurance that the person is recognized as competent to internationally accepted standards of performance"

International Market

Market delivery strategy• Need for rationalization of service

providers (PCB)• Virtual e-based - anywhere,

anytime!• Centralized control of certification

and data management systems, marketing, and business/product development

• Decentralized service centers via in-country joint venture

• Promotion to industry

International Market

Market delivery• Decentralized service centers• Low risk, minimum capital

investment•Local service – face, culture,

and currency•Maintain control of

certification•Consistency of competencies

International Market

Service

• Virtual e-based “plug and go!”

• Tailored personnel certification

• Training provider accreditation

• Tailored professional development

• International registers

Market Satisfiers

1. Competent people – value and relevance to bottom line

2. Market (industry) recognition

3. International (common) examination and recognition of competence

4. Tailored industry certification schemes

Roadmap to Certification

PCB Scheme Committee

Stakeholder engagement

Scheme designDefinition of

competencies

TrainingExamination of

knowledge

PCB CertificationExamination of

evidence of skills, knowledge, experience, attributes

IndustryExamination of evidence

of skills, attributes

Evaluation process

Trends

• Auditor certification bodies move from qualification-based to competence-based programs

• Considering different ways to get good feedback on auditor performance

• Training

Auditor Competence

Genericknowledgeand skills

(7.3.1)

Qualityspecific

knowledge andskills (7.3.3)

Environmentalspecific

knowledge andskills (7.3.3)

Education Workexperience

Auditortraining

Auditorexperience(7.4)

Personal attributes (7.2)

Who Will Deliver This

to the Marketplace?RAB QSA International

•Need final board approval•Must have business plan in

place•NEW

•Leadership•Web site•Process•Accreditation

What is the Future?

• RAB will become two organizations• Accreditation business will work to

enhance international cooperation between ABs and ensure integrity of accredited CRBs

• Personnel certification business will lead the way from “qualified” auditors to “competent” personnel