1. ASQ Energy and Environmental Division Management Systems Beyond Today’s Horizon Robert H. King Sept. 13, 2004

2. Today’s Agenda RAB value statement How RAB must change and stay true to the mission New ways of doing business Issues in today’s world

3. RAB Vision and Mission

4. RAB Vision RAB will be an acknowledged leader: Guiding the international development and implementation of accreditation and certification processes that build confidence and value for stakeholders worldwide Providing the most professional, value-added services for its customers

5. RAB Mission Value-added, cost-effective provider of CA services Advance credibility of CA Establish mutual recognition agreements that advance acceptance of CA activities Recognized leader in continually improving CA processes

6. RAB Background Financially self-supporting non- profit organization in Milwaukee Governed by 17-member board representing EMS and QMS Exists to serve conformity assessment needs of business, registrars, course providers, and individual auditors

7. Organizational Relationships ANSI Conformity Assessment Policy Committee RAB Board of Directors ANSI-RAB National Accreditation Program Joint Oversight Board Accreditation and Certification Board QMS Council EMS Council Accredit QMS Registrars Accredit EMS Registrars Certify QMS and EMS Auditors Accredit QMS and EMS Course Providers Certification Services (Administered by RAB Staff) Accreditation Services (Administered by ANSI and RAB Staff)

8. ANSI-RAB National Accreditation Program RAB Operating partner for programs Coordinates initial accreditation audits and ongoing surveillance audits of registrars ANSI Provides due process and public review of program criteria and procedures Promotes NAP and represents it internationally

9. ANSI-RAB agreement does not meet the “legal entity” requirement Both accreditation (CRBs) and certification (auditors) in the same organization IAF Concerns

10. How This Will Change ANSI-RAB NAP will change identity New businesses of accreditation will emerge Former partnership with ANSI will become legal entity

11. Options for Future of Auditor Business Find cooperative partner Possible Buy competitor Expensive Inch forward with core business and expand by new business introduction Impractical

12. QSA International Quality Society of Australasia Ltd. Established in 1989 as professional society Not-for-profit company limited by guarantee Based in Sydney with JV offices in Hanoi, Kuala Lampur, and Auckland, with representation Hong Kong, China, and India

13. First Step to Merger Agreed objective: To exploit, develop, and profit from the international personnel certification and training accreditation markets, achieving the status of “company of first choice” for persons seeking recognition and professional development.

14. RABQSA International Incorporated in U.S. as 501(c)(6) Principal centers USA and Australia with international joint venture offices Single board, business plan, market ASQ will be only member ISO/IEC 17024 accredited Priority markets: core and developing economies

15. RABQSA International QSA and RAB boards approved Agreement signed in June Interim board established Bylaws drafted Business case complete Plan in place for reorganization under tax exempt status

16. New Business Processes MCAA Value-added assessments Auditing post-Enron Trends in auditor competence and RAB’s direction

17. Multilateral Cooperative Accreditation Arrangement

18. Multilateral Cooperative Accreditation Agreement IAF Guidance on Cross Frontier Accreditation: “Defined arrangements between IAF MLA signatory ABs are also necessary to meet the requirements of clause 2.1.3 of ISO/IEC Guide 61, e.g., through subcontracting arrangements and arrangements for joint assessment activity.”

19. MCAA Purpose To provide for the recognition of the acceptability of the results of each party’s assessment and accreditation program based upon the determination of equivalence

20. MCAA Scope Covers accreditation programs for certification bodies of management systems for QMS, EMS, QS-9000, AS9100, TL 9000, and RC 14001, and does not include any other accreditation program administered by any of the parties

21. MCAA Implementation Initially signed by JAB (Japan) and ANSI-RAB NAP (United States) in September 2003 JAS-ANZ (Australia and New Zealand) subsequently signed in December 2003 SAI Global jointly accredited by NAP, JAB, and JAS-ANZ in June

22. MCAA and Cross- Frontier Guidance Method by which ABs can meet requirements of cross-frontier guidance MCAA formalizes network of ABs required by cross-frontier guidance Method of ensuring that ABs in developing countries are engaged

23. MCAA Management System Highlights Initial accreditation audits In lieu of full system office or witness audit, AB may consider reviewing previous audit reports of CRB’s AB AND Conduct abbreviated audits with emphasis on Advisories (where applicable) and results of off-site document review

24. MCAA Management System Highlights Re-accreditation and surveillance audits ABs cooperate with other signatories to agree upon a surveillance and re- accreditation program for each mutually accredited CRB Eliminating redundant audits takes cost out of the system

25. Advantages for CRBs CRBs that are mutually accredited by MCAA ABs would immediately realize reduced audits and dollar savings CRBs will find that reclassification to avoid the critical office clause is unnecessary

26. Advantages for CRBs Three CRBs mutually accredited by NAP, JAB, and JAS-ANZ This could immediately assist the three CRBs by reducing audits Savings to CRBs Five more CRB offices accredited by NAP, JAB, and JAS-ANZ This could assist CRBs under cross- frontier policy

27. MCAA Advantages Provides for harmonization of processes Provides for AB member auditor training Requires member ABs to be signatories of IAF MLA Requires participating CRBs to agree to shared information Increases oversight information to member ABs

28. Improving Integrity of AB Programs Language barriers eliminated International audits conducted by auditors who speak and read the language Confidence in other ABs’ work Annual audits of ABs will ensure AB network’s confidence in each other’s processes

29. Improving Integrity of AB Programs Plethora of info on accredited CRBs CRBs must sign release to allow ABs to share information on audit results, complaints, appeals, issues, etc. Flexibility to not work with AB even though it’s MLA signatory If initial audit of AB is unsuccessful, AB network could decline to sign MCAA with that AB

30. Value-Added Assessments

31. Elements that add value: Effectiveness Efficiency Cost reduction Waste elimination Risk management Control

32. Skills to Enhance Trust How to enhance confidence people put in auditing and CA scheme Be open and honest Communicate clearly Provide outstanding service Do better understanding and addressing needs Demonstrate industry leadership

33. Leadership Skills Most important leadership qualities: Assume personal responsibility Show care and concern for customers Stick to code of ethics Communicate openly Handle crises better

34. Auditing Post-Enron

35. Auditing in the Post-Enron Age Reaffirms importance of avoiding conflict between auditing and consulting Illustrates how quickly trust can be replaced by skepticism Need to see increased attention as upside of Enron collapse

36. Auditing vs. Consulting Perception of risk to auditor’s independence can damage company Enron dramatizes need to focus on auditor independence, potential for conflict of interest Shareholders more inclined to apply pressure

37. Auditing Post-Enron Need more than checklist audit Value a function of professional independence and impartiality Well-crafted nonconformity statements indicate value of work performed

38. Trends In Auditor Competence

39. ISO/IEC 17024 Management systems standard for personnel certification bodies Competency-based requirements will replace current qualification- based approach RABQSA International will offer truly global option for accredited certification

40. International Market Our product Target market Sales strategy Market delivery strategy Service strategy Product R&D

41. International Market Our product Accredited personnel certification Training provider accreditation Professional development International registers

42. Current Drivers Example: MS Auditing capabilities purpose identity values and behavior audit management system auditor inspection and compliance technical auditing skills service environment (market) compliance auditing

43. New (Competency) Drivers capabilities purpose identity values and behavior improve business performance improver and facilitator value and relevance business improvement skills service environment (market) business improvement

44. International Market Target market - industry segments Conformity, risk assessment – MS auditor certification Professional certification – consultant, BI specialists, managers Trade certification Industry specific certification

45. International Market Market "engagement of persons independently certified by RABQSA provides you with the confidence and assurance that the person is recognized as competent to internationally accepted standards of performance"

46. International Market Market delivery strategy Need for rationalization of service providers (PCB) Virtual e-based - anywhere, anytime! Centralized control of certification and data management systems, marketing, and business/product development Decentralized service centers via in- country joint venture Promotion to industry

47. International Market Market delivery Decentralized service centers Low risk, minimum capital investment Local service – face, culture, and currency Maintain control of certification Consistency of competencies

48. International Market Service Virtual e-based “plug and go!” Tailored personnel certification Training provider accreditation Tailored professional development International registers

49. Market Satisfiers 1.Competent people – value and relevance to bottom line 2.Market (industry) recognition 3.International (common) examination and recognition of competence 4.Tailored industry certification schemes

50. Roadmap to Certification PCB Scheme Committee Stakeholder engagement Scheme design Definition of competencies Training Examination of knowledge PCB Certification Examination of evidence of skills, knowledge, experience, attributes Industry Examination of evidence of skills, attributes Evaluation process

51. Trends Auditor certification bodies move from qualification-based to competence-based programs Considering different ways to get good feedback on auditor performance Training

52. Auditor Competence

53. Who Will Deliver This to the Marketplace? RAB QSA International Need final board approval Must have business plan in place NEW Leadership Web site Process Accreditation

54. What is the Future? RAB will become two organizations Accreditation business will work to enhance international cooperation between ABs and ensure integrity of accredited CRBs Personnel certification business will lead the way from “qualified” auditors to “competent” personnel