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Friday, 10 July 2015

Defining First, Second and Third Party Auditing:

Let me try to clarify some things about these auditing and certification arrangements that may still be confusing to some operators in the food industry or any business for that matter.

“Third Party Auditing” = “Corroborative Witness Auditing”. In this arrangement, one party (the first party - supplier) does business with another party (the second party - customer). A third party (audit services provider) audits the first party and informs the second party how the first party is doing. Trust is weakest in this auditing arrangement.
“Second Party Auditing” = “Vested Interest Auditing”. In this arrangement, the second party (the customer) wants to see with its own eyes, so to speak, and be sure that the first party (the supplier) is doing everything necessary according to the second party’s needs, specifications and expectations. Trust is moderate in this arrangement and corroboration by a third party is not necessary but outside audit services providers may be utilized.
“First Party Auditing” = “Internal Auditing” = “Vested Interest, Customer and Consumer-centric, Self-Motivated, Inevitable Business Management, Improvement and Survival Strategy”. That almost says it all except to add that outside audit services providers may also be utilized providing that these service providers are brought into the fold, so to speak, and given the opportunity to thoroughly understand and experience the customs and challenges of the first party as members of a collaborative team with the first party. Trust is strongest with a self-motivated, well-intended and properly managed internal auditing system. Customers find no cause to spy on suppliers or police them.
"Regulatory Auditing" = "Both Second and Third Party Public Protection/Education Auditing" In its purest form, regulatory auditing should be without other vested interests except regulators are also consumers and they report to consumers as they must.

The above descriptions merely represent current market understanding of these categories of audits. My understanding of what they are does not mean that I blindly accept them. Naturally, I am inclined to go with where trust is strongest – the “first party auditing” option.

Calling an audit a "third or second party audit" is actually a misnomer that creates an artificial distancing of auditors from the realities at play. Every auditor is a consumer and should naturally have vested interest in the audit. If audits are conducted from that perspective, things could get really hot for deviant operators and that is not what we want. On the other side of this consideration is the fact that every operator has vested interest as the business owner. However, the operator or business owner is foremost a consumer. Hence the operator or business owner should also naturally have vested interest in audits. Even regulators should have vested interest in audits since they too are consumers. Essentially, all audits are first party audits since consumers are auditing businesses owned by other consumers, etcetera.

I understand but I do not condone the wrongly applied guards against conflict of interest that appear to have led to this misleading classification of audits. The food safety auditing industry, in an over-generalized fashion, prevents expert auditors from assisting the companies they audit for fear of conflict of interest. This only appears to be wise on the surface. If auditors cannot be trusted to show integrity in conflict of interest situations, how can they be trusted with anything else?

The same food safety auditing industry that imposes unnecessary conflict of interest rules (with wrong assumptions about conflict of interest), sets retailers up as the best guardians of consumers without seeing the blatant conflict of interest.

The Hypocrisy
The industry has seen bands of retailers or other commercial interests coming together to create auditing schemes called “standards”. Where these schemes are not directly created by retailers or other commercial interests, they (the schemes) are heavily sponsored by the commercial interests. Even if these arrangements do not expose the hypocrisy, retailers are clearly not the best guardians of consumers – at least not in the current retailing environment that is steeped in greedy competition, corruption and fraud. Retailers also rarely subject themselves to audits against the standards they have created. 
It is true that retailers only buy and sell, and manufacturers need to be monitored. On the surface, this argument may appear to be made “for the sake of consumers”. Is it? Are retailers that much more trustworthy than manufacturers? Do retailers really care so much about the welfare of consumers that they should or could be their guardians? Do they actually wish to go beyond protecting their businesses against liabilities by doing what they fondly refer to as exercising due diligence? Is it any surprise that superficiality has overtaken food safety monitoring and auditing in the current marketplace?
What is too frequently forgotten in the food safety auditing business is that we are indeed all consumers. The urge to simply make money appears to have overtaken the food industry at large. Some sanity needs to be brought back. 

Assessing the success of food safety assurance efforts by food businesses must have the right focus - the protection of consumers. Giving this consumer protection no more than lip-service is shameful. That is out right self-defrauding and somewhat suicidal. I admit that these are strong words but what else will awaken the industry from its current stupor?
With the above explanation, it becomes immediately clear why efforts are to be collaborative. The question is: Are they? If efforts are truly collaborative the modus operandi of conducting audits in the marketplace today will be significantly different. The policing approach will give way completely to the kind of collaborative effort that is a Hallmark of the SSQA concept.

If you are still not sufficiently clear, you may contact the author.

For further reading:
Posted By Felix Amiri
Felix Amiri is the current Food Sector Chair of GCSE-Food & Health Protection

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