A Checklist for a Manufacturing Company Internal Audit!

Internal audit

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Internal audit article and permission to publish here provided by Angela at Reciprocity Labs.

Today, manufacturing firms face increasing threats from cybercriminals targeting weaknesses in SCADA (supervisory, control, and data acquisition) systems.

Regulatory bodies recognize the data security challenges that manufacturers face, and have initiated various requirements and standards of operations meant to safeguard data. Non-compliant firms risk huge fines or even jail terms for the responsible actors.

To survive in today’s competitive global manufacturing industry, companies need to incorporate various security compliance measures in their operations. Regulatory compliance requirements should be built into a company’s internal control systems.

Primary Cybersecurity Threats Facing Manufacturing Companies

SCADA networks comprise of various software and hardware that are used to monitor or control equipment in a manufacturing plant. Through the systems, IT staff can manage devices, control remote and local processes, log data, among other things.

Internal audit

However, most SCADA networks fail in terms of enabling the connectivity required in today’s modern manufacturing plants. Therefore, the systems are prime targets for cybercriminals. The risks posed by the networks can result in huge losses due to compromised production lines.

Regulatory Compliance Requirements for Manufacturers

The federal government is in charge of designing the regulatory compliance standards for manufacturers. The requirements outline specific rules that should be followed for national security purposes. The rules allow private players to create items that can be used by the government without having to be federal entities.

Below are two of the main federal regulatory compliance requirements for manufacturers:

Defense Federal Acquisition Regulation Supplement (DFARS)

DFARS regulation outlines the security standards that information systems developed for transmitting, processing, or storing contract information by the government should meet. Manufacturers have to comply with the regulation across all spheres of their operations. The compliance guidelines are outlined in the NIST Special Publication SP 800-171.

International Traffic in Arms Regulation (ITAR)

ITAR combines both commercial and research objectives with national security requirements. The regulation covers both technology and manufactured goods. Manufacturers that design items for commercial purposes but which the military can adopt, such as software and computers, have to abide by this regulation.

Manufacturing Industry Standards Guidelines

Traditionally, manufacturers have been implementing controls outlined in various ISO (International Organization for Standardization) guidelines.

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The primary ISO standards that apply to manufacturers are:

ISO 9001

The ISO 9001 outlines the security standards that a quality management system (QMS) should meet. A QMS documents the processes, responsibilities, and procedures of quality objectives.

There are three types of audits that are provided for in ISO 9001. These audits are designed for products, processes, and systems.

The ISO 9001 documentation has a lengthy list of both mandatory and optional requirements. Under mandatory requirements, companies need to document the following:

  • Preventive action procedures
  • Corrective action procedures
  • Internal audit procedures
  • Records procedures
  • Document control procedures

For each of the categories above, additional documents have to be provided to prove compliance.

ISO/IEC 27001:2013

The ISO/IEC 27001:2013 regulation is a flexible risk-based approach that covers information security. The standard comprises of a series of controls in Annex A, which guide manufacturers in designing custom security standards based on their needs.

The extended controls in Annex A allow management to prevent, transfer, or accept risk instead of using controls to mitigate them.

Internal Audits for Manufacturing Companies

Carrying out internal audits can be quite cumbersome. However, the audits are effective “pre-tests” that can show how well a firm is prepared before external audits are carried out. A well-implemented internal audit can highlight security weaknesses in your operations, which you can remediate before an external audit is carried out.

Follow the steps below to carry out an internal audit:

i) Involve primary stakeholder players in the audit

While you may be carrying an internal audit, it is crucial to involve various organization stakeholders in the process. For example, the IT department and SCADA experts will need to work together to create a robust security-first approach to ensure compliance.

ii) Document internal control procedures

Regardless of the size of your enterprise, establish and document risk analysis, processes, procedures, and policies. The documentation will guide the organization in implementing compliance regulatory requirements. Inventory control is a key element of these procedures.

iii) Monitor the effectiveness of compliance controls

Cyberthreats are continuously evolving and to be safe, organizations need to keep abreast of the latest risk management strategies. Your controls’ effectiveness can weaken when threats are not consistently being monitored.

iv) Document the monitoring processes

Proper documentation is crucial to carrying out an effective audit. While you may be consistently monitoring threats, the external auditor may fault your compliance efforts if there is no proper documentation.

v) Create an internal audit communication pipeline

Finally, ensure that there is proper communication during the auditing process. Communication is important for maintaining security and compliance. Come up with a process for reviewing internal audits to ensure all compliance measures are implemented on time.

Importance Of Using Audit Software  

How do you manage your quality audit process? What specific tools can you use for this activity? You might want to consider utilizing an audit software program to plan, execute, approve, and report quality matters affecting your manufacturing business. 

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Manufacturing companies have various automation tools, such as inventory management software, to improve productivity and output. Such leading technology can help drive a smoother manufacturing business operation, saving time, labor, money, and even manufacturing materials and other resources. 

Because supplier and quality audits are a vital part of the continuous improvement for manufacturing businesses, it’s imperative to have an internal audit system in place, such as using an audit software system. In this way, you can have smooth quality transitions from operational compliance issues, differentiating your strategic business initiatives for your manufacturing company.  

The benefits of using an audit software program for your manufacturing business include the following: 

  • Meet product quality requirements and overall manufacturing business goals  
  • Faster and more efficient audit processing 
  • Improve manufacturing productivity and general business operations 

Where can you find an excellent audit software program for your manufacturing business? Many audit software providers are offering reliable tools for audit or quality control processing. You can choose a reliable software program to optimize your audit with the help of audit software from ETQ and similar tools.

The Internal Audit Checklist

The above is an overview of the main regulatory compliance requirements for manufacturers and the steps to take to carry out an internal compliance audit.

Originally written for Supply Chain Game Changer and published on February 27, 2020.

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