ASQ Energy and Environmental Division Management Systems Beyond

ASQ Energy and Environmental Division Management Systems Beyond Today’s Horizon Robert H. King Sept. 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 Vision and 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 nonprofit 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 Conformity Assessment Policy Committee RAB Board of Directors ANSI-RAB National Accreditation Program Joint Oversight Board QMS Council EMS Council Accreditation Services (Administered by ANSI and RAB Staff) Accredit QMS Registrars Accreditation and Certification Board Accredit EMS Registrars Certification Services (Administered by RAB Staff) Certify QMS and EMS Auditors Accredit QMS and EMS Course Providers

ANSI-RAB National Accreditation Program ANSI • Provides due process and public review of program criteria and procedures • Promotes NAP and represents it internationally RAB • Operating partner for programs • Coordinates initial accreditation audits and ongoing surveillance audits of registrars

IAF Concerns • ANSI-RAB agreement does not meet the “legal entity” requirement • Both accreditation (CRBs) and certification (auditors) in the same organization

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 Business Find cooperative partner • Possible Buy competitor • Expensive Inch 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

Multilateral Cooperative Accreditation Arrangement

Multilateral Cooperative Accreditation Agreement IAF 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, AS 9100, 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 Management System 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 Management System Highlights Re-accreditation and surveillance audits • ABs cooperate with other signatories to agree upon a surveillance and reaccreditation 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 CRBs Five more CRB offices accredited by NAP, JAB, and JAS-ANZ • This could assist CRBs under crossfrontier 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 Integrity of 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 Integrity of 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

Auditing Post-Enron

Auditing in the Post-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 In Auditor Competence

ISO/IEC 17024 • Management systems standard for personnel certification bodies • Competency-based requirements will replace current qualificationbased 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 Drivers Example: MS Auditing purpose identity audit management system auditor values and behavior capabilities service environment (market) inspection and compliance technical auditing skills compliance auditing

New (Competency) Drivers purpose identity improve business performance improver and facilitator values and behavior capabilities 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 "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 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 incountry joint venture • Promotion to industry

International 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 design Definition of competencies Evaluation process Training Examination of knowledge PCB Certification Examination of evidence of skills, knowledge, experience, attributes Industry Examination of evidence of skills, attributes

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

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