Why Your Business Needs a 3rd Party Audit


Audits are an essential part of any company’s management process. The audit process checks whether documents are in order, accounts for finances, and ensures that a company is compliant with certain industry standards.

Usually, when a company adopts a quality assurance or quality management system (like the ISO 9001), a system-wide audit is necessary to ensure that all aspects within that system are up to standard.

There are many different types of audits. Here, we discuss the difference between internal and external audits. An internal audit is performed by departments or personnel within a company, and, while still a useful endeavor, there may be questions as to the objectivity of the assessment.

An external audit, on the other hand, is conducted by business consultants, which are independent organizations with the necessary skill and experience to determine the level of compliance and quality of a company.

1st Party Audit

Also known as an internal audit, a 1st party audit is when a member of a company or organization reviews their own quality management or assurance system. This allows the company to assess whether the new system fits well-within company regulations. 1st party audits are also used to confirm the effectiveness of a new system or used to determine the areas of improvement of an existing system. A 1st party audit is usually conducted by an employee of the organization, albeit one who has no vested interest in the audit results.

Although this is a generally effective way for a company or organization to perform a self-assessment, with internal controls being vital to the success of a company, it may not be the most objective method. As such, a 1st party audit doesn’t grant certification, which is important in terms of assuring customers of quality.

2nd Party Audit

A 2nd party audit is an external audit that is performed by a customer on a supplier, or by any external party that has an interest in the supplier. This type of audit covers the goods and services offered by a supplier and follows certain procedures that are pre-determined in a contract. These audits can either be done on-site or off-site. On-site 2nd party audits are performed to review certain processes within the new system, while off-site 2nd party audits are usually done to review documentation.

Although 2nd party audits provide an extra layer of objectivity, they are still subject to the rules of contract law, and as such are still reliant on parameters set by the supplier.

3rd Party Audit

A 3rd party audit is performed by independent auditors or audit organizations, making it free of any conflict-of-interest or any vested interest in the audit results. This type of audit allows for the greatest amount of objectivity. A 3rd party audit by a reputable organization can also provide companies with expert analyses, along with more comprehensive results from both on-site and off-site methods.

As they are the most objective form of auditing, 3rd party audits pave the way for certification, recognition, and even awards. Additionally, 3rd party audits are the best way to ensure customers that a company follows standards of quality and excellence, as they provide companies an unbiased and objective analysis of their proposed quality management processes and systems.

Contact BDeWees Consulting to learn how our team can provide audits for your company.