Internal audit clients are often worried that mistakes made during their daily activities will result in audit report findings. In fact, many audit report findings are not due to fraud or outright negligent behavior, but the result of mistakes people make. What we sometimes don’t examine sufficiently, or explain to our clients, is that processes should be built to operate error-free in the first place.  Even when controls detect errors, customers report gaffes, or sheer luck saves the day, these events often cause re-work. Reportable or not, these events create opportunities to add value to our clients. 

Poka-yoke is a Japanese term meaning mistake-proofing. It is a methodology that focuses on eliminating defects in products and services by preventing or drawing attention to human errors that can occur.    

The technique can be used as follows in service environments:

Spreadsheets
Color-code and password-protect cells so data can only be entered on pre-determined fields.  Also use validation checks, such as range and format checks, to identify typing errors during data entry. Batch and hash totals can also be used to count how many items, records, documents, or the sum of a chosen field. With this information, the manual entries can be compared to the source to verify that nothing is missing or is entered more than once. 

Reconciliations and Templates
Use formulas with check totals that indicate through color changes when the totals agree or disagree.

Data Entry
Require operators to re-enter certain figures to make sure data entry is accurate.

Expense Reports
Program the system to automatically display a child (i.e. pop-up) window when the amount of the expense is above an established threshold, or in relation to pre-determined categories such as mileage, meals, airfare, hotel costs or other/miscellaneous.

Entry-Logs
For manual or semi-automated entry logs, set the requirement that all or some of the information be selected from a pull-down menu (e.g. employees, students), and the rest be typed rather than hand-written. This eliminates penmanship issues which is a limitation of sign-in sheets where the information provided cannot be deciphered on the entry-exit log.  In addition, by increasing automation data entry requirements can be enhanced so essential information cannot be left blank

Poka-Yoke

In industrial environments, poka-yoke is often used as follows:

Orientation
Parts in an assembly won’t fit if placed incorrectly.

Sequence
The process must be performed in a predetermined sequence, so steps cannot be missed or done in a different order.

Weights
Inaccurate weight forces the machine to stop before further work can be performed.

Location, Size, Count
Requires the presence, absence or different size of components to proceed

Machine or System check
The machine stops operating when out of specification

While the term poka-yoke may be new, all of us has benefited from the application of its principles.  The evidence is virtually everywhere around us.

Power plugs
Typically, they can only be plugged in one way because they don’t fit into the power outlet otherwise. 

Cables
Ethernet and USB cables can only be plugged in one way and they typically have a small latch to keep the cable from being pulled out of the device accidentally.

Garage and elevator doors
They have sensors to prevent them from closing accidentally when an object is in the door’s path, which can cause injury or damages.

Microwave machines
The motor on the microwave oven stops working when the door is opened or closed improperly.

Automobiles
The driver cannot start the engine, or change the gears from Park to Drive unless the brake pedal is pressed. 

When applying poka-yoke in your observations, analysis, and recommendations, you should follow these principles:

  • Simple and Intuitive:  The procedure should be easy to figure out and use
  • Inexpensive:  Consider the cost-benefit involved
  • Fail-Safe:  Make sure to consider various scenarios so the mechanism or approach works every time
  • Mandatory:  Every user should be required to follow the procedure

Poka-yoke or mistake-proofing is done so errors don’t happen in processes in the first place.  But it also reduces training time and costs, rejects and warranty claims, the need for inspection and quality control later, and lowers user and worker frustration by preventing avoidable mistakes.

Audit clients appreciate recommendations that improve the work environment and increase efficiencies and overall effectiveness.  Poka-yoke does that and its principles can be used in service and industrial environments alike.  This will result in more meaningful discussions with your clients, improve client relations, and demonstrate that as internal auditors we are not only trying to find mistakes but also helping the organization avoid them.  Detecting problems is good, but preventing them is much better!

Interesting in learning more about this and other tools and techniques? Join Dr. Murdock when he teaches Lean Six Sigma Skills for Auditors, Internal Audit School, and High-Impact Skills for Developing and Leading Your Audit Team.