MODULE 5: Tools

Tools — Quantitative and Qualitative Tools

Tool #1: Flowchart - [Qualitative]
Notes:
 Inter-related symbols (Graphical)
 System flowchart – IPO
 Document flowchart – SOURCE, DISPOSITION, FUNCTIONAL
 Program flowchart
 Universal
 Use of Flowline (T-B, L-R) “Kiss me” effect

Very helpful and versatile tool to help auditors answer these questions:
● The objectives of the program or process
● How performance is measured
● How the activities are performed
● Who perform these activities
● Where the risks and controls are
● Where anomalies take place

Benefits
● A teaching tool
● Managerial tool
● Flexible
● Worth a thousand words
● Easy to review
● Useful in discussions
Challenges
● May be too detailed if the area is complex
● Can take a long time to prepare
● User must learn symbols

Tool #2: Control Chart - [Quantitative]

Notes:
 Monitoring (Patterns)
 Plot and study how process changes overtime

Controls, just like risks, must be monitored and the tracking of their performance will provide
management with valuable information about the strengths and weaknesses of these controls and what
should be done to strengthen them.
● Has a central line for the average or target value for the process being plotted
● Upper control limit and a lower control limit
● If the process is in control, more than 99% of the transactions will fall within the control limits
● If there are observations outside these thresholds, this suggests there are sources of variation

Benefits
● Understand the variations that are always present in processes
● See when something is going wrong or may go wrong
● Notice patterns
● Predict future performance
 ● Generate new ideas for improvements
Challenges
● May involve several rules that are applied to identify anomalies
● The rules and statistical analysis involved can be substantially more complex

Tool #3: Cause and Effect (Fishbone, Ishikawa) Diagram - [Qualitative]

Notes:
 Head – Condition
 Arrows pointing to the backbone – Major categories of issues
 Smaller arrows – Sub-cause “Drill-down” effect
 Answers: “Why problem exists”

Name of the person who invented it, Kaoru Ishikawa.

Benefits
● Helps teams understand that there are many causes that contribute to an effect
● Graphically displays the relationship of the causes to the effect and to each other
● It helps to identify areas for improvement
Challenges
● Irrelevant potential causes can cause confusion
● Complex issues may lead to a messy diagram

Tool #4: Check Sheet - [Quantitative or Qualitative]

Notes:
 “Tally Sheet”
 Frequency patterns of problems

A check sheet is a structured form or document used to collect and analyze data.
Data are often used to track and count the number of instances of various phenomena associated with
the review being performed.
The challenge resides not only on the use or lack of use of this tool, since most auditors use it already.
The challenge lies in how check sheets are designed.

Benefits
● Helps to analyze the data for corrective and preventive actions
● Helps to take decision at a glance to control the product and process related non conformance
● Helps to detect how often a problem occurs
● It facilitates systematic record keeping or data collection
Challenges
● Doesn't allow explanations
● Easy to overlook what isn't there

Tool #5: RACI Diagram - [Qualitative]

Notes:
 Create synergy
In every organization, there is a hierarchy of responsibilities that facilitate the completion of work.
In fact, one of the reasons organizations are created is to leverage the contributions of multiple
individuals so that by their integrated work and collaboration, more can be accomplished.
It describes the participation by various roles in completing tasks or deliverables and it is especially
useful in clarifying roles and responsibilities in cross-functional or departmental projects and processes
because it identifies who does what.

R = Responsible (the team member who does the work to complete the task).
A = Accountable (the person who delegates work and provides final review on a task or deliverable
before it's deemed complete).
C = Consulted (people who provide input on a deliverable based on the impact on their work or their
domain of expertise).
I = Informed (people who need to be kept in the loop on project progress).

Benefits
● Clarifies roles and eliminates confusion
● Keeps projects on track and ensures nothing falls through the cracks
● Ensures smooth transitions and handoffs when there is turnover
● Prioritizes communication between teams and stakeholders
Challenges
● Doesn't clarify actions that team members need to take
● May add complexity to some projects or processes
● Not suitable for all types of projects

Tool #6: Scatter Diagram - [Quantitative]

Notes:
 Outlier – Best or worst

A scatter diagram is a visual tool for analyzing pairs of numerical data and showing the relationship
between two variables.
It is sometimes called a scatter plot or an X–Y graph, with one variable on each axis. One variable is
plotted on the horizontal axis and the other is plotted on the vertical axis, and if the variables are
correlated, the points will fall along a line or a curve.
When analyzing the plotted data, the objective is to determine if a correlation exists between two
values. The correlation exists if a change in one value causes a change in another value. The
relationship has two general key elements: direction and intensity.
Even if the scatter diagram shows a relationship, we should not assume that one variable caused the
other.

Benefits
● Easy to draw
● Can be easily understood and interpreted
● Values of extreme items do not affect this method
Challenges
● Unable to measure the precise extent of correlation
● Not a quantitative measure of the relationship between the variables

Tool #7: Pareto Chart - [Quantitative]

Notes:
 80% effect are caused by 20% causes
 Focus to areas that needs to be focused first
  Using past data

The Pareto principle, also known as the 80/20 rule

Pareto diagrams are designed to organize data and can be used to prioritize improvement effort by
focusing on major root causes of the problems under review.
The focus is to focus on the root causes, and look for cause and effect relationships.
These charts are often used to identify areas to focus on first in process improvement.

Benefits
● Simple and effective
● Effective tool in determining the major problems caused
● Can help an organization in identifying problems and finding alternate solutions quickly
Challenges
● Based on past data
● Cannot predict uncertainty that will arise in the future
● Does not provide insights on the potential solutions in solving the issues
● Reflect qualitative insights and is not of much use in summing up quantitative solutions

Tool #8: Affinity Diagram - [Qualitative]

Notes:
 Organize ideas and large amount of data
 Clusters

Affinity diagrams, also called affinity charts or the Jiro Kawakita (KJ) method
Affinity diagrams work best when the team is small and you want to highlight similarities in ideas to
build consensus and organize ideas or items into categories or themes.

Benefits
● Help to unify large amounts of data by finding relationships between concepts or ideas
● Allow organizing facts, opinions, and issues into taxonomies in order to help diagnose complex
problems and identify common issues
● Organize several ideas, such as after brainstorming
Challenges
● Requires reserving a space
● Tied to the physical location
● Less detail, but can also force you to think and summarize
● Have to do a manual search by scanning the entire affinity diagram trying to find a particular
note
● You can lose track of which participant each note came from

Tool #9: Histogram - [Quantitative]

Notes:
 Frequency of numerical data using rectangles

They display the probability distribution of a continuous variable.

Histograms are used to assess the distribution of data and help to identify how the data points are
distributed.
In so doing, the information is more than a picture of the data points, but instead shows a flow of the
data.
Benefits
● A single glance at a histogram gives us some idea about the shape and spread of the data
● Can represent a large number of bars representing different class intervals
● May be used for the graphic location of the value of Mode
Challenges
● Can present data that is misleading
● Cannot read exact values because data is grouped into categories
● More difficult to compare two data sets

Tool #10: Force Field Analysis - [Qualitative]

This is a great decision-making tool to identify the forces for and against a course of action.
It is a technique to list, discuss, and evaluate the forces that support or hinder a decision.
It can also help to strategize the best way to present the information by understanding the big picture
and the pros and cons of the recommendation.
Lastly, it forces the proposal advocate to “walk a mile in the auditees' shoes.”

Benefits
● Provides a visual summary of all the various factors supporting and opposing a particular idea
● Expands the evaluation beyond the data itself to look at qualitative factors that may have an
impact on the success or failure of the decision being analyzed
Challenges
● Requires the full participation of everyone involved to provide the accurate information required
for an effective analysis
● Possibility that the analysis won't result in a consensus among the group

Tool #11: Takt Time - [Quantitative]

Takt time = Total production time per period ÷ Customer demand per period
Takt time is the rate at which the production operation produces output.
It relates to the amount of time to perform each activity.

For example, consider a mortgage loan processing operation with a staff of 10 operators that receives
an average of 180 loan applications per day. The unit spends 6 h actively processing these applications
per day after deducting lunch, breaks, and required meetings. Takt time would be calculated as follows:
Takt time = (10 operators × 6 h × 60 min per hour) ÷ 180 applications per day = 3600 ÷ 180
Takt time = 20 min per application
This metric can be used to determine the pace to keep a process flowing, so there are no bottlenecks in
a process.
It can also be used to set the performance expectations for the process, so operators know what their
goal is so they can meet or surpass it.

Tool #12: Eight Areas of Waste - [Qualitative]

Waste reduction is imperative to increase profitability and better utilize the limited resources that most
organizations operate with.
Waste occurs when more resources are consumed than necessary to produce the goods or services the
customer actually wants.
The eight areas of waste identified are:
● Transporting
● Unnecessary Inventory
● Excess Motion
● Waiting
● Unnecessary Production
● Defects
 ● Overproduction
● Underutilized Employees

Tool #13: Communications Plan - [Qualitative]

A communications plan is very simple to prepare and very useful to make sure communications within
and outside the team are effective.
The means of communication can be formal or informal. However, it is usually best to make the majority
of them formal to ensure consistency, provide the proper coverage, and make sure this happens
promptly. Informal communications are also very important and serve as a great supplement to formal
communication channels and activities.
A communications plan identifies the key elements to make sure the intended message is received,
understood, and acted upon by the main stakeholders during the engagement, providing a schedule of
key communications and defining what will be shared.
It helps to make sure the messages get to the audience.
What, when, where, who, how, and why

Tool #14: Communications Matrix - [Qualitative]

While the communications plan provides a framework for communicating, the communications matrix is
used to summarize and facilitate the communication plan by defining the details regarding the
communications activities that are used during the team or department's activities during the course of
the project.
Key Components: communication type, description, delivery method, frequency, documents,
participants, and those responsible for making sure each communication event takes place according to
the plan.