Internal Audit vs Gap Analysis – What is the difference?

Businesses often turn to various tools and methodologies to assess their processes, identify areas for enhancement, and ensure conformance with standards and regulations.

Two commonly employed approaches are internal audits and gap analysis. While both serve the goal of improving performance and ensuring conformance, they differ significantly in their scope, methodology, and outcomes.

This blog looks at the difference between internal audits and gap analysis, looking at their respective roles and contributions to organisational success.

What is a Gap Analysis?

A gap analysis is mainly a determination of the degree of conformance of your organisation to the requirements of a specification or standard. It takes a document and pits it against defined criteria in a line by line comparison.

It is like a ‘Where’s Waldo’ game with your Management System. If the regulation says that you must write something in blue ink, then your procedure should require that it is also written in blue ink. If it does not demonstrate adherence, then a gap is identified. The gap analysis is great for comparisons of regulations or standards against procedures, forms, or other documents.

A gap analysis is often conducted at the beginning of the journey of an organisation seeking conformance to a chosen standard, however it may also be conducted after some development has taken place.

The main reason why the gap analysis is conducted at the beginning of the development phase or after some development has occurred is because the organisation wants to know where they stand in regard to meeting the standard and they want to know specifically what they need to do to close the gaps.

Basically, they want to know where the holes are–whether few or many- and what they need to do to close those holes and get closer to fully meeting the requirements of the chosen specification or standard. It helps organisations pinpoint deficiencies in processes, performance, or capabilities and develop actionable plans to bridge these gaps.

What is an Internal Audit?

An internal audit is an activity that seeks to determine the degree to which your organisation conforms to the requirements of a specification or standard or to your own organisational requirements. This a systematic, independent, and documented process for obtaining audit evidence and evaluating it objectively. 

The outcome will assist with determining the extent to which audit criteria are fulfilled. It involves a thorough examination of an organisation’s internal controls, processes, and systems to ensure their effectiveness, efficiency, and conformance with laws and regulations. Internal audits are typically conducted by an organisation’s internal audit department or a dedicated team of auditors and there should always be a scope highlighting the audit objectives.

 

An internal audit is usually conducted after the development of processes (e.g., a quality management system) has been completed and some implementation has occurred. The reason is that internal auditors will question individuals to assess their system knowledge. 

If implementation is not underway, it may be hard to prove that employees are actually using the system and are knowledgeable of their roles and responsibilities. The primary objective is to provide management with insights into risk management, control, and governance processes, and to recommend improvements where necessary.

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Internal Audit vs Gap Analysis

  • Internal audits focus on evaluating existing processes and ensuring conformance, while gap analysis focuses on identifying strategic gaps and priorities for improvement.

  • Internal audits involve systematic reviews conducted by internal auditors, while gap analysis employs comparative analysis and strategic planning tools.

  • Internal audits have a broad scope, covering multiple functions and processes within the organisation. Gap analysis can be tailored to specific objectives or focus areas.

  • The outcome of internal audits includes findings and recommendations for improvement, while the outcome of gap analysis is a strategic plan or roadmap for bridging identified gaps and achieving desired outcomes.

A Gap Analysis identifies deviations between an organisation’s current practices and supporting documentation and the requirements of their chosen ISO Management System Standards, showing where improvements are needed before certification.

Internal Audits are a systematic and impartial review, conducted at regular intervals. They aim to determine whether the organisation is operating under its own requirements (as defined in its management system), as well as those of the chosen ISO Standard(s. It also verifies that it is operating effectively to meet customer requirements.

So in short, a Gap Analysis identifies discrepancies between current practices and ISO Management System Standard(s) requirements, while Internal Audits verify the conformance and effectiveness of the management system. Internal audits are usually recurring and systematic, while a gap analysis can be a one-time or periodic exercise, depending on the organisation’s specific needs and goals.

Purpose of a Gap Analysis in ISO Management Systems  

A sound foundation is important and therefore the point of departure best starts with establishing which of your current work practices and business controls already satisfy the requirements of your chosen ISO standard.

By doing so one can make use of what already works and can prevent duplication. This ‘Gap Analysis’ may be performed by a specialist, or you can attend Internal and Supplier Auditor training and conduct the assessment yourself.

Here’s when a gap analysis should be conducted:

1.     ISO Management System implementation

If a management system is not mature enough to produce records yet, then it is hard to determine if the processes are effective. However, in these early stages, you can determine if the requirements are met within the management system documents.

2.     When changes are made to the ISO Standards or regulations

When ISO comes out with a new revision, a gap analysis can help identify areas that need to be updated to reflect the changes in the standard. Ideally early enough to make changes in your system before any implementation and transition deadlines.

Keep in Mind: The gap analysis is a tool. It does not replace an internal audit that is a requirement of most Management System Standards. This leads us to the reporting.

A good gap analysis report typically provides a concise overview of the major gaps between the company’s management arrangements and documentation, and the specified requirements.. It should also show a detailed recount of each requirement and the degree of conformance, with corresponding actions that need to be taken to close these gaps.

Benefits of a Gap Analysis

  • Improved conformance: Ensures that gaps between current arrangements and ISO standard requirements are determined for strategic plans to be developed to close the gaps.

  • Enhanced efficiency: Identifies inefficiencies and areas for improvement, leading to more streamlined and effective processes.

  • Risk management: Helps to identify potential risks and areas of non-conformance that could be the difference between third-party certification and audit failure.

  • Informed decision-making: Provides a clear understanding of where the organisation stands in terms of conformance, aiding in strategic planning and decision-making.

Purpose of the Internal Audit in ISO Management Systems

Internal audits serve critical purposes within organisations:

1.     Ensuring conformance

By scrutinising adherence to internal policies, international standards, industry regulations, and customer demands, internal audits mitigate the risk of non-conformity, averting legal consequences and customer dissatisfaction.

2.     Determining system effectiveness

These audits evaluate the performance of management systems, ensuring alignment with organisational objectives and operational efficiency.

3.     Exploring opportunities for improvement

Internal audits identify areas for enhancement within processes and systems, fostering a culture of continual improvement. This proactive approach reduces inefficiencies, minimises waste, and enhances overall productivity.

4.     Providing feedback to top management

Valuable insights can be gained into system and process performance, enabling informed decision-making by top management. This feedback loop ensures resources are allocated effectively and strategic objectives are set for sustained growth and improvement.

Benefits of the Internal Audit

  • Conformance assurance: Verifying adherence to ISO standards ensures conformance with internal policies, international regulations, and customer expectations, mitigating risks and maintaining certification.

  • Identifying non-conformities: An internal audit is the most stringent of all audit types. Therefore, it very effectively uncovers discrepancies and allows for corrective actions, improving overall performance and re-alignment with documented procedures.

  • Enhanced efficiency: By pinpointing inefficiencies, internal audits drive operational excellence, optimising resource allocation and boosting productivity.

  • Risk management: Evaluating pre-empted risks and opportunities can aid in proactively mitigating disruptions, enhancing resilience, and ensuring operational continuity.

  • Management review support: Internal audit findings provide valuable insights for strategic planning, aiding with informed decision-making at all organisational levels.

  • Internal Stakeholder confidence: Demonstrating commitment to conformance through audits enhances stakeholder trust, increasing satisfaction, regulatory conformance, and market competitiveness.

Conclusion

Both internal audits and gap analysis are indispensable tools for organisations striving for excellence and conformance with ISO standards.

Internal audits focus on evaluating existing processes, ensuring conformance, and providing feedback to top management. Gap analysis is instrumental in identifying discrepancies between current practices and ISO requirements, guiding organisations towards certification readiness.

Both methodologies contribute to improved efficiency, risk management, and informed decision-making.

By leveraging the benefits of an internal audit or gap analysis, organisations can enhance conformance, streamline processes, mitigate risks, and foster a culture of continuous improvement, ultimately driving organisational success and sustainability.

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Tap into Risk ZA's expertise

If you’re looking to optimise your organisation’s processes and ensure conformance to  ISO Management System, standards, consider leveraging both internal audits and gap analysis as part of your ISO management system strategy.

Contact Risk ZA today to learn more about how our services can help you achieve your ISO  standards conformance goals. 📞 Call us at +27 (0) 31 569 5900 or +44 (0) 203 728 6179, or send an email to enquiries@riskza.com

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