Academic journal article Journal of Accountancy

ISO 9000

Academic journal article Journal of Accountancy

ISO 9000

Article excerpt

ISO 9000 was developed by the International Organization of Standards (ISO), a European Community body that sought to establish worldwide quality standards. ISO 9000 addresses process quality standards, not product quality standards. It does not involve, for instance, checking to see if a TV has top-notch color but, rather, examining the process and the controls used during its manufacture.

ISO 9000 has different levels of certification depending on the complexity of manufacturers' operations, which range from warehousing and distribution (for smaller manufacturers) to full product design, manufacturing, installation and service (for larger companies). No matter what certification level is sought by a manufacturer, ISO 9000 requires a heavy reliance on written policies, procedures, quality documentation and so on.

In recent surveys, 51% of American midsized manufacturers said they were not certain what ISO was and weren't interested in certification. This is unfortunate, because midsized manufacturers earning $250 million or less are the country's real economic base. Further, ISO 9000 certification stresses many of the areas where such companies do poorly--such as documentation, policies and procedures.

Also, there is an awful lot that manufacturers can gain from complying with ISO 9000 even if they don't become certified, because the whole process focuses on how manufacturing operations work, how they're controlled, how they're optimized--peeling back every manufacturing area layer by layer and looking to see if it really is coordinated or if there are stand-alone departments that don't integrate with anybody else. As manufacturers document such functions under ISO 9000, they start finding out who's not in the loop.

ISO 9000 certification primarily is performed by registrars. There are around 35 registrars in the United States, the biggest being Underwriters Laboratories. Many are franchises of European Community registrars such as the British Standards Institute.

KPMG Peat Marwick plans to become the first major U.S. accounting firm that is an ISO registrar.

But the real role of U.S. accounting firms will be conducting precertification audits, which are "walk-throughs" to see if policies and procedures are coordinated, if a quality manual was created and so on. That's the type of service accounting firms have been providing all along: taking a look at a manufacturer's operations and saying, "The way you bring material into your receiving dock and record what's there and the quality testing you do seem kind of weak." It turns out this is almost chapter and verse from ISO standards. Firms were doing portions of this work in the past, although under different standards, with a different emphasis and to a limited extent. ISO 9000 is drawing it all together.

Accountants should be warned there's a lot of bad information floating around. Also, there's a perception that certified companies are "better" than companies that are not. When you cut through the smoke and mirrors, ISO certification says you've attained the goals you set for your processes. If a manufacturer says it's going to put out 80% bad material and 20% good material, as long as that's documented--as long as that's what its goals are and it's determined that everybody is working toward those goals--it can be ISO certified. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed


An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.