Criticism on audits and assurance: an ISEAL response

Fairtrade Auditors © FLOCERT
Fairtrade Auditors © FLOCERT
Criticism continues to arise about audits, both those of standards and company’s own inspections. ISEAL explores two issues, including how competent auditors are needed to ensure audits don’t maintain the status quo, and how credible standards should seek continuous improvement in their assurance so as to support overall governance regimes in important sectors.

Two reports have come out that bring up important issues around audits and assurance.  The most recent one is a policy brief from the University of Sheffield that explores issues culled from 25 interviews held throughout 2012-2014 with auditors, company executives, NGOs and supplier firms in the UK, US and China; as well as some factory visits in China.  The brief explores whether audits done by standards or companies bring about change, or whether they maintain business-as usual.  Some ISEAL members are mentioned in the paper, and its conclusion is to reject the audit. While the paper brings up interesting points, it’s important to point out that the work is not based on field data, but rather a set of opinions leading to the authors’ position to cast-off the ethical audit.

In reading the criticism, we continue to come back to one of the main tenets of ISEAL’s Assurance Code: to ensure that auditing is rigorous and competent and therefore that auditors themselves are rigorous and competent. Our Assurance Code sets out the minimum requirements to ensure a good auditor: that there are competency requirements, that auditors are trained to those competencies, that auditors attend calibration sessions, and that they are evaluated regularly on their competency.  We have to ensure that audits bring about meaningful change, and auditors play perhaps the most vital role in this.  We’ve recognised this for some time and so ISEAL offers a range of resources for our community to help them improve auditor competence, including links to hiring toolkits and frameworks for auditor training programmes.

ISEAL is also exploring and testing innovations in assurance, such as the extent to which an audit can be used for capacity building, while still maintaining the rigour of the inspection. Another area ripe for innovation is around continuous improvement. If a standard is less focused on pass/fail and more about driving an enterprise up a ladder of improvement, the assurance process changes its focus as well. New innovations around technology are expanding among ISEAL members as well, such as Accreditation Services International's (ASI) work with FSC on an auditor registry that will have a central system to track complaints, trainings and other data. ISEAL member GoodWeave is working with technology partners to reach the most vulnerable workers in carpet factories, harnessing mobile phone/voice technology to pick up on issues and conditions directly from workers that an audit or satellite image might not see.​

A second report (Who Watches the Watchmen?) from the Environmental Investigation Agency (UK) came out last November, focusing specifically on one ISEAL member (RSPO) and its place as part of an overall governance regime.  The report cited a breakdown in governance, particularly around the assurance process, and asked for meaningful reform. RSPO has made clear that it is working on improving accountability and compliance, and two weeks ago announced the decision of ASI to suspend two certification bodies found to be in violation of RSPO’s certification system requirement, following audits that began in 2015.  RSPO had initiated the investigations by ASI (ASI is also an ISEAL member and provides third-party accreditation to the RSPO certification programme).

Despite our best efforts, we know as standard-setters that even a tough inspection with an inquisitive auditing team cannot always control for corruption or inadequate legislation in challenging parts of the world. The reality is that sustainability standards, especially those focusing on natural resource sectors, are applied in places where there can be deeply entrenched structures.

This doesn’t absolve us of the need to ensure we are always striving for improvement in our assurance processes.  ISEAL members know that audits are never a guarantee, but we embrace continuous improvement in our systems, and are always striving for innovation.