Mar 12, 2025
The Cost of a Failed ISO Audit
In a global marketplace, international standards are essential to protecting consumers, companies, and their respective industries. The International Organization for Standardization (ISO), develops and publishes international standards to ensure products and services work how you would expect them to. With over 21,000 published standards, companies can become certified for nearly anything, ranging from quality and environmental management, to information security management.
With so many standards to be certified against, companies must choose the standard(s) they wish to be audited against appropriately and must prepare accordingly. Failure to do so could have varying ramifications and incur unnecessary costs. In this article, we discuss what happens in the case of a failed ISO audit, the consequences of non-compliance and the steps you can take when preparing for an ISO audit.
Common ISO Standards
ISO 9000 - Quality Management: Built for organizations looking to improve the quality of their products or services, the ISO 9000 family addresses various aspects of quality management and contains some of ISO's best-known standards.
ISO 27001 - Information Security Management: Enables organizations of any kind to manage sensitive information. ISO 27001 provides companies with a framework to follow when creating and managing an information security system.
ISO 14000 - Environmental Management: Sets out criteria for an effective environmental management system and is designed for any type of organization. Measure and reduce your environmental impact while providing assurance to management, employees, and stakeholders.
ISO 42001 - AI Management: Specifically designed for AI management systems, ISO 42001 provides a structured framework for organizations to govern, develop, and deploy AI responsibly. This standard helps ensure AI systems are secure, transparent, and aligned with ethical and regulatory requirements.
ISO 31000 - Risk Management: Provides guidelines for risk management, helping organizations identify, assess, and mitigate risks that could impact their objectives. ISO 31000 applies to all industries and can be integrated into existing management systems to improve decision-making and resilience.
ISO 37201 - Compliance Management: Outlines requirements for a compliance management system (CMS) that enables organizations to establish, develop, evaluate, and improve their compliance framework. This standard helps ensure adherence to legal, regulatory, and ethical obligations.
What Happens If I Fail an ISO Audit?
When companies fail their ISO audit, they have some extra steps to take before re-assessment. Depending on the severity of non-compliance, some businesses would need to make more adjustments than others resulting in additional spending. Depending on the level of non-compliance, re-assessment can cost as much as 60% of the original assessment.
Areas of non-compliance can be classified by severity:
Opportunity for improvement: singe lapse or isolated incident. This will not prevent certification but should be addressed to maintain compliance
Minor nonconformity: failure to completely comply with a requirement which is not likely to result in management system failure. This can prevent certification or re-certification but usually only if there are other areas of nonconformity
Major nonconformity: absence or total breakdown of a system designed to address a requirement, or several minor non-conformance related to the same requirement. This usually prevents certification
Fortunately, there is no direct penalty to a business when they are deemed non-compliant, but there are other potential repercussions. An ISO certification may be an industry or client specific requirement and failing to acquire it may have a lasting knock-on effect when getting to market.
After failing an ISO audit, a business will be given detailed information about the reasons for failure and actions required to address these reasons. This information identifies areas of nonconformity and should be used a guide for areas to address before a follow-up or fresh audit.
Common Pitfalls During an ISO Audit
When preparing for an ISO audit, sidestepping common errors can be the key to achieving certification. Based on industry insights and expert advice, here’s a comprehensive breakdown of the top mistakes to avoid:
1. Concealing Corrective and Preventive Actions (CAPAs)
A major issue is failing to actively use your Quality Management System (QMS) for CAPA documentation. Concealment can signal inadequate process utilization. Auditors seek to validate effective monitoring and documentation of all corrective actions, reflecting proactive improvement, not flawless perfection.
2. Inadequate Proof of Employee Training
Employee competence is a critical component of ISO standards. Your organization must keep comprehensive training records, including attendance, evaluations, and certifications. Centralized record-keeping simplifies proving that employees are fully trained and qualified during audits.
3. Skipping Internal Audits
Conducting internal audits is akin to reviewing for an exam. They help identify gaps and weaknesses before external evaluations occur. A routine internal audit program not only prepares you for official audits but also drives continuous process improvement.
4. Insufficient Management Engagement
The absence of active management support can jeopardize ISO compliance. Management must prioritize quality initiatives, allocate proper resources, and effectively integrate QMS into the company's core operations.
5. Weak CAPA Mechanisms
An effective CAPA process involves thorough root cause analysis, beyond attributing issues to “human error.” Organizations should foster a culture that encourages deep investigation and ongoing system enhancements, ensuring CAPA actions lead to substantial process improvements.
6. Poor Document Control
Controlling document access, versions, and approvals is crucial. ISO standards require clear identification and access to current documents, whether digital or paper-based. Inconsistencies, particularly in document control processes, can reveal significant compliance gaps.
7. Outdated Management Review Practices
Using outdated management review structures can prevent proper risk assessment and action planning. Regularly updating review agendas to align with current ISO standards ensures that reviews cover comprehensive performance and improvement strategies.
8. Choosing the Wrong Software Tool
Selecting an overly complex or unsuitable software tool can hinder compliance. The tool should be user-friendly and align with ISO requirements without requiring excessive customization, ensuring seamless integration into daily operations.
Avoiding these mistakes can play a pivotal role in your success during an ISO audit, ensuring that your operations not only meet but sustain high standards of quality management.
How Hiding CAPAs Can Lead to Failure in an ISO Audit
When it comes to ISO audits, not utilizing your Quality Management System (QMS) effectively is a recipe for failure. One critical aspect where many companies falter is in the handling of Corrective and Preventive Actions (CAPAs).
The Importance of CAPAs
CAPAs are essential in demonstrating your commitment to quality and continuous improvement. They serve as documented evidence of your response to issues and your proactive steps to prevent future occurrences. During an ISO audit, transparency with CAPAs is crucial.
Common Missteps
Some upper management teams mistakenly believe that having too many CAPAs may complicate the audit process. As a result, they may attempt to obscure or underreport these actions. This approach is misguided and can trigger suspicion during an audit, ultimately leading to failure.
Perception of Non-Compliance: Auditors are vigilant about CAPAs. They are trained to notice when a company appears to have fewer documented issues than statistically expected. An unusually low number of CAPAs suggests that management might be sweeping issues under the rug, rather than addressing them transparently.
Red Flags: An ISO auditor seeks evidence of effective use of the QMS. If your organization seems to have minimal CAPAs, it implies non-use or misuse of established procedures, raising red flags. Auditors recognize that all systems face challenges and that addressing these challenges head-on is a sign of a mature quality system.
Reality Check: Even the best plans encounter obstacles. The most quality-conscious organizations are those that visibly highlight their corrective and preventive efforts, showing a willingness to improve constantly.
What is an Ineffective CAPA Process?
An ineffective Corrective and Preventive Action (CAPA) process often manifests itself when investigations are hurriedly closed, frequently attributing the root causes to vague reasons such as "human error." This approach tends to bypass a deeper understanding of the issues, ultimately allowing problems to persist.
Here are the telltale signs of a flawed CAPA process:
Superficial Investigation: Rather than identifying and addressing underlying issues, there's a tendency to settle for quick fixes without scrupulous inquiry.
Lack of Resource Allocation: Organizations may not allocate sufficient resources, such as dedicated personnel or effective linking with other quality processes, to manage CAPA comprehensively.
Cultural Shortcomings: An ineffective CAPA process often reflects a company culture that prioritizes quick closure over thorough investigation and is reluctant to air problems openly. This culture doesn't foster agility or a commitment to ongoing improvement.
Inadequate Monitoring and Follow-Up: Once initiated, CAPA actions are not consistently tracked to verify the effectiveness of implemented safeguards and measures.
Poor Scope of Initiation: CAPAs are seldom initiated for a broad range of potential issues, including non-conformances, process deficiencies, and other areas within the Quality Management System (QMS).
To summarize, an ineffective CAPA process is marked by a superficial approach to problem-solving, inadequate resources and cultural support, and a lack of comprehensive monitoring and scope. Improving these areas can transform a CAPA process from a mere checkbox exercise to an integral component of continuous organizational improvement. Hiding CAPAs gives the impression of a stagnant or underutilized QMS, putting your organization at significant risk during ISO audits. Transparency and continuous improvement are the hallmarks of a successful audit process.
The Impact of Absent Management on ISO Audit Success
Having strong management involvement is crucial for passing an ISO audit. When leadership lacks commitment or is absent, the road to certification can become fraught with challenges. Here's how missing management resources can lead to audit failure:
Lack of Direction: Without active managerial involvement, the Quality Management System (QMS) may become sidelined. Instead of being integral to the business processes, it turns into a neglected side project. This can lead to inconsistencies and errors that an ISO audit will flag.
Resource Shortages: Management is responsible for allocating necessary resources for ISO compliance. Without their support, the organization may suffer from inadequate staffing, insufficient training, or lack of proper tools and technology—all critical components for a successful audit.
Failure to Foster a Quality Culture: Management plays a pivotal role in cultivating a culture of quality. Their absence might result in employees not fully embracing QMS protocols, leading to routine operations that fall outside the system’s requirements. Such discrepancies are often highlighted during an audit.
Inadequate Oversight and Planning: The ISO 9001:2015 standard emphasizes management’s responsibility in planning, oversight, and continual improvement. Missing this oversight can result in outdated or ineffective processes, which won't withstand the rigorous scrutiny of an audit.
To pass an ISO audit successfully, senior management must be fully engaged, providing necessary direction, resources, and support. Their involvement is the cornerstone of a robust, compliant QMS that aligns with ISO standards.
The Impact of Choosing the Wrong Software on Compliance and ISO Audits
Selecting the right software is critical for maintaining regulatory compliance and audit readiness. While GRC software isn't a mandatory requirement for frameworks like ISO 27001, SOC 2, or NIST CSF, it significantly enhances risk management and compliance efforts. However, choosing the wrong platform can create inefficiencies, hinder audit preparation, and introduce unnecessary risks.
Lack of Customization
A common mistake organizations make is selecting a generic GRC tool and attempting to customize it to fit their specific regulatory requirements. Extensive customization can lead to system malfunctions, data inconsistencies, and compliance gaps. Instead of simplifying compliance, an ill-fitted solution may leave organizations vulnerable to regulatory scrutiny and audit deficiencies.
Overly Complex Systems
Some organizations assume that a feature-rich GRC platform automatically translates to better compliance management. However, overly complex systems often require dedicated administrators, extensive training, and custom configurations that can slow adoption. If users struggle with the system’s complexity, critical risk and compliance processes may be mismanaged or overlooked, increasing operational risks.
Streamlining Compliance with the Right GRC Software
An effective GRC solution, such as StandardFusion streamlines compliance from the start, supporting key functions like risk assessments, audit management, regulatory tracking, and policy enforcement. The right platform integrates seamlessly with existing workflows, improving visibility, collaboration, and overall efficiency. With a well-chosen GRC system, organizations can enhance governance, mitigate risks, and ensure they are always prepared for audits.
In summary, the wrong software can complicate compliance efforts, increase risk exposure, and negatively impact audit outcomes. Selecting a system that aligns with your organization's regulatory requirements and operational needs is essential for long-term compliance success.
What is the Preparation for ISO audits?
ISO audits are extensive and thorough tests of compliance, designed to measure your organization against the requirements of a specific ISO standard, such as ISO 27001, ISO 9001, or ISO 13485. The audit is conducted by a third party and serves as a benchmark to ensure your processes and systems meet at least the minimum standards for quality. Ideally, the audit will reveal opportunities for improvement before any major quality issues arise.
They can also become relatively expensive depending on factors such as the scope and complexity of the audit and the size of the company. ISO 27001, for example, can cost companies an average of $80,000 USD for the certification process. With that in mind, it's crucial to be properly prepared to minimize the chance of failure.
We have compiled a few steps you can follow when preparing for an ISO audit:
Initial preparations: Understand the ISO standard by accessing available guides and purchasing the standard itself. Appoint an ISO champion to lead the internal process. This person can be an internal appointee or a recruited expert.
Familiarizing the Business: Communicate the value of ISO certification to employees to involve them in the process from the beginning. This ensures buy-in and commitment across the organization.
Information Security Management: ISO certification is an organization-wide process managed by senior leaders. Management should review objectives, policies, and critical areas of action to align the certification process with business goals.
Assessment and Analysis: Conduct a gap analysis and risk assessment early to set the scope of implementation. Assess risks, controls, and security vulnerabilities. This serves as a benchmark to measure progress and identify key areas for action, forming the basis of a quality management system, a key requirement for certification.
Conduct an Internal ISO Audit: After implementing actions, controls, and quality management processes, conduct an internal audit to test the business's preparedness. This will identify areas of non-compliance to address before an external audit. The audit can be conducted by an in-house auditor or a third-party expert.
Address the Gaps: Address any areas of non-compliance identified by the internal audit and repeat the process if required.
To maintain a continual state of audit-readiness, integrate regular internal audit efforts using the same criteria as ISO auditors. This ongoing practice helps uncover non-conformances proactively. Follow up tirelessly with corrective and preventive actions to ensure areas of non-compliance are addressed swiftly.
Commitment to Quality Culture: Embedding a quality-driven culture within the organization is crucial. It ensures that compliance becomes part of the organizational ethos, not just a one-time effort. Utilize the right tools to support these efforts, avoiding the pitfalls of non-compliance and staying off the ISO audit blooper reel.
By maintaining a vigilant and proactive approach, your organization can seamlessly align with ISO standards, ensuring readiness not just for the next audit, but as a sustained operational standard.
The ISO audit process
ISO auditors play a crucial role in helping organizations achieve and maintain compliance with international standards. These professionals are trained to evaluate and assess an organization's processes, procedures, and operations against industry benchmarks. They have a keen eye for identifying weaknesses and offering actionable recommendations for improvement, which can boost efficiency and enhance customer service.
ISO auditors approach their task with the objective of understanding your quality management system (QMS) and ensuring it aligns with standards. Their goal is not to find faults but to gather the necessary evidence that your system is up to par.
ISO external audits are conducted by independent certification bodies and consist of two stages:
Stage 1 Audit: The first stage is a documentation review, where the auditor assesses processes and policies for ISO standard compliance. This is essentially a pre-assessment, where the auditor completes a high-level review of the business's Information Security Management System (ISMS).
Stage 2 Audit: The second stage is the certification audit. Here, the auditor conducts a thorough on-site assessment to determine if the organization meets ISO standards. They look for evidence that the organization follows the documentation reviewed in the first stage. The auditor will also review their checklist and provide direction about any areas of non-compliance. If the auditor determines the organization is compliant, they will recommend ISO certification.
In addition to conducting these audits, ISO auditors provide valuable guidance on maintaining compliance with ISO standards. Their expertise helps organizations not only meet but also sustain the required benchmarks over time.
Why Using Outdated Management Review Agendas is Problematic for ISO Audits
Relying on outdated management review agendas can lead to several issues during ISO audits, particularly with standards like ISO 9001. Here's why it's crucial to stay current:
Non-Conformance Risks: Using an outdated agenda, such as one from ISO 9001:2008, might mean you're neglecting newer requirements. This oversight can cause discrepancies, leaving your organization vulnerable to non-conformance findings.
Incompleteness: Older agendas may omit significant sections introduced in more recent standards. This can include critical areas like risk management or detailed records of actions taken, which are necessary for comprehensive compliance.
Audit Readiness: Internal audits serve as a vital checkpoint to ensure all documentation aligns with current standards. An outdated agenda could mean that minor errors in document compliance go unchecked, affecting your readiness for external audits.
Detail Orientation: Internal auditors can rectify these issues by utilizing checklists aligned with the current standards. It's essential for internal processes to be meticulous, ensuring each aspect of the agenda captures all necessary updates.
In summary, keeping management review agendas up to date is essential for maintaining conformity with ISO standards, avoiding setbacks in audits, and ensuring continuous improvement within your organization.
Why is Proof of Employee Training Important in an ISO Audit?
Proof of employee training is a critical component of passing an ISO audit. The ISO 9001 standard emphasizes the importance of employee competence, training, and awareness to ensure that a company’s workforce is equipped to meet quality standards throughout the employee lifecycle.
Key Reasons for Documenting Training
Auditor Expectations: ISO auditors expect organizations to provide clear records of employee training. They assess whether employees have the necessary skills and ongoing development to perform effectively. Without proper documentation, proving compliance can become challenging.
Centralized Records: Relying on department heads or team leaders to track training can lead to inconsistencies and errors. A centralized system ensures that all training records are accurate, up-to-date, and readily available during an audit.
Comprehensive Competency Documentation: It’s not enough to simply track training completion. Audits require a thorough documentation of various aspects of employee qualifications.
This includes:
Performance evaluations
Test scores from training programs
Certifications and academic degrees
Detailed performance reviews
Job postings and position descriptions
Employee resumes
Attendance records at training sessions
Agendas of the training courses
Demonstrating Commitment to Quality: Proper documentation demonstrates a commitment to maintaining high standards and continuous improvement. It shows that the organization values its workforce’s development and aligns with ISO's core principles.
Mitigating Risks: Detailed records help in identifying skills gaps and training needs, reducing the risk of non-compliance and potential failures in product or service quality.
Overall, proof of training is essential for confirming that employees are not only trained but also competent in their roles. This forms the backbone of any effective quality management system and ensures the business is audit-ready at all times.
How to Manage ISO Audits
When it comes to managing your ISO audit(s), there are a range of software tools and third-party services that can help you throughout the process. Depending on the size of your company and scope of the project, tools are used in tandem with external experts.
Software tools: ISO audits require extensive documentation and evidence to demonstrate compliance to external auditors. ISO audit software can manage the control and review of audit-related documentation
Government, Risk and Compliance (GRC) software that integrates with quality management systems and other controls, to streamline information security processes. Most tools can integrate with existing systems and monitor information security from a single, centralized platform. They monitor and produce regular reports on critical areas from a centralized platform.
External consultants: expert consultants can guide businesses through the ISO certification process from start to finish. Consultants can be used to conduct assessment and risk analysis to identify areas of concern, assist in implementation of compliant processes and conduct internal audit to ensure compliance.
Summary
Becoming ISO compliant is a thorough process that demonstrates the recipient's commitment to improving quality, consistency, or security. Companies who are ISO certified will have successfully implemented industry best practices and can provide their partners and stakeholders with the assurance they require. Companies that have failed an ISO audit can repeat the certification process but may feel the financial and reputational repercussions. Fortunately, companies have multiple resources and tools at their disposal to decrease cost and reduce the chances of failing an audit.
