Articles

Overview of OHS Purchasing Part 2

Wed, 20 Apr 2011 23:57:00 GMT

Overview
Purchasing methodologies are formalised processes used to manage financial and contractual control and risk management systems in relation to goods suppliers or services providers. In this second part of the overview of purchasing we continue with further areas that need to be addressed.

Credit Cards and Petty Cash

Purchasing using these methods has the broadest potential for introducing uncontrolled risk into the workplace. An organisation must define controls for the purchase of OHS related goods and services using credit card or petty cash.

A simple option for organisations to use as a control mechanism is a mandatory requirement for no OHS-related goods or services to be purchased through these arrangements.

Alternatively it’s possible to limit purchasing using credit card or petty cash. This can be arranged through a number of options:

Only position holders at a certain level within the organisation can exercise this function
A mandatory procedural requirement for pre-purchase risk assessment to be conducted
A defined list of goods or services that may be purchased using credit card or petty cash be defined

Pre Commencement meetings (Services)

The function of a pre-commencement meeting is to define specific OHS management systems requirements in relation to contractual arrangements with key stakeholders of both the organisation and the contractor providing the service.

Requirements relating to pre-commencement meetings must be evaluated to determine whether there is a risk management issue to consider. Requirements can be either procedurally defined as a mandatory function prior to commencement or as a formal consideration when conducting risk assessment of the scope of the contract.

Pre-commencement meetings are also used to establish communication and recording arrangements identify key position holders and determine the appropriate methods for verification activity.

Receipt of Goods

A process for the receipt of goods needs to be defined as a control methodology to prevent non-conforming goods from entering the workplace. The process will include the method for conducting the verification of the goods against the specification (or purchase order).

These are the basic safeguards:

OHS-compliant goods: Receipting arrangements for conforming goods and certification of OHS compliance should be proceduralised, to establish a clear working process.>

Non-compliant goods: Where goods have been identified as non-conforming to required specifications (including legislative requirements) a process must be developed to ensure that isolation and/or quarantining arrangements are implemented.

Quarantine operations: Quarantining arrangements will also define the process for the return of goods and the method used to ensure that goods can not be taken out of quarantine and inadvertently used in the workplace.

Note: Quarantine is a critical mechanism for safe practices, particularly in relation to hazardous goods, biological agents, etc. Statutory processes must be referenced in relation to these processes.

Corrective Action

Alignment with organizational corrective action processes must be standardised within purchasing procedural arrangements. These arrangements will need to identify the initiating criteria for commencement of corrective action.

Initiators for corrective action can include:

Nonconforming goods
Non-compliance with local ohs arrangements for service providers
Contractual non-conformance for supplies or service providers

Monitoring

Specific OHS requirements set a performance standard to be met by a supplier or service provider and verified by the purchaser. Processes for OHS verification activity is to be defined.

Process verification activities can either be contractual/project based or determined through risk assessment activity when developing contractual specifications.

Risk assessment can also be used to vary the scope of verification activity during the contractual life cycle using preceding performance outcomes.

Records and documentation procedural requirements will also specify the OHS records to be maintained for the purpose of capturing monitoring information.

Performance Review

Performance review mechanisms are required to evaluate achievement of expected outcomes to meet contractual requirements. OHS procedural requirements should be developed in such a way that they complement those processes.

Performance review can be conducted at the completion of the delivery of the contract or at specified intervals throughout the contract life cycle. In some cases, performance monitoring may involve specific milestone tasks related to the contract.

Performance reviews will evaluate the capacity of the supplier or service provider to meet milestones and contractual OHS specifications. Where non-compliance has been identified a corrective action process must be initiated to bring the performance into line with required outcomes.

Performance reviews are also an effective tool to be used where a supplier or service provider tenders for future contractual work. This provides the organisation with practical performance outcomes in relation to the capacity to deliver on agreed arrangements and this information can be considered during the tender evaluation phase.

Common Problems

Common problems in relation to Purchasing are:

“Generic” OHS specifications are used which do not provide specific requirements relative to the scope of the activity to be performed. The “generic” OHS approach is usually in breach of one or more statutes. In practice, OHS specifications must be case-specific, and incorporate statutory requirements.
Lack of appropriately qualified people to assess OHS risk management issues. This situation should be avoided at all costs.OHS consulting specialists can provide this expertise if required.
Lack of procedural understanding in the application of contractual requirements and their interaction with OHS criteria. (See Part 1, Overview and Determining contractual OHS requirements for efficiency-based options and procedures)
Verification activity is not defined or conducted during the course of contract delivery, or is ineffective. This is a “worst practice” scenario. It’s absolutely essential that verification is conducted systematically, particularly any statutorily required procedures. Purchasers should note that failure to conduct verification processes may expose them to serious risks, and in some cases severe penalties. External consultants should be engaged ASAP to conduct a full remedial process.

Overview of OHS Purchasing Part 1

Wed, 20 Apr 2011 23:53:00 GMT

Overview
Purchasing is a formal financial and contractual control process at several operational levels. This process includes a risk management systems strategy OHS requirements to eliminate or mitigate risk exposure related to purchases of products or services.

Best practice is to merge OHS risk management evaluation into existing purchasing procedures. The risk management requirements become natural components of the purchasing operations. This greatly simplifies (in fact, it de-clutters) financial and contractual management operations, and ensures that OHS risk management is a straightforward, transparent operational function in the purchasing process.

Most importantly, this approach allows for a pro forma, all-inclusive system for all purchases in relation to OHS. The purchasing process must include clearly defined risk evaluation requirements. This is basically a “check list” process, and it works very well. Not all purchases, obviously, will require risk management and things like hazard evaluations. Using a simple pro forma approach it’s possible to simply provide appropriate evaluations and reports as required for each purchase.

The streamlined, inclusive approach is also extremely cost efficient. The alternative approach, which is separate purchasing and risk management documentation, creates two administrative processes and at least two more management functions at financial and contractual levels.

There are long term advantages in this highly systematic form of purchasing. OHS requirements can easily be built into contractual arrangements or memorandums of understanding, defining purchasing criteria. This “spell it out” approach is also contractual best practice, ensuring clarity in contract service requirements.

Determining contractual OHS requirements

A contract related OHS Risk Assessment activity must be conducted to determine risk potential with regard to the goods or services to be provided. The risk assessment activity must clearly identify the OHS control mechanisms to be included in the contract or tender documents.

OHS control mechanisms for inclusion in contract and tender documents may include:

Detailed requirements regarding documentation to be submitted (e.g. OHS management systems, site safety plans or safe work method statements)
Supervisory and contractual arrangements to be implemented
Resource requirements (e.g. the level of supervision to be provided, specialists to be used, etc)
Inspection, reporting and recording arrangements (where applicable)
Additional requirements relating specifically to the contract type (e.g. packaging requirements, delivery, traffic management issues, PPE requirements)
Local OHS requirements that apply to a supplier or service provider (non generic arrangements)

Important: Please note that in many cases these contract specifications must also reference and meet statutory requirements. It is strongly recommended that contracts are drafted on a strictly formal basis in regards to all statutory issues. Contractors should be required to comply with applicable regulations and legislation. Failure to do so may expose purchasers to liabilities and a lack of legal grounds for plaint against breaches of statute or other malpractices by suppliers.

Contract and Tender Evaluation and Approval

OHS evaluation should be conducted as a component of this evaluation process, not as a separate activity. For administrative efficiency, it’s important to have these related processes contained in a single stream.

Evaluation panels must have a representative with appropriate OHS assessment skills and expertise to evaluate the OHS component of any submitted documentation.
Evaluation of submitted documentation may be used as a preliminary screening/sorting tool prior to further evaluation.
Suitable weightings in relation to evaluation and assessment of OHS conformance to tender and contractual specification are to be applied. Assistance in determining suitable weightings can be based on risk assessment outcomes and the evaluation of severity of risk in relation to the provision of goods or services.

Following acceptance of recommendation of a suitable candidate, the contract may proceed according to specified preliminary criteria and execution of contract documents.

Note: This process must include an evaluation to ensure that all process steps have been completed as required by contract or tender. Purchasers may be held liable for incidents in which these checks were not conducted.

Purchase Orders

Where appropriate, OHS-specific purchase orders should match and complement existing purchasing processes contained in the OHS management system. (The simplest approach is the basic accounting norm, including a section for OHS in standard purchasing entries and notation for related documentation and addenda, like AAS27.)

An organisation should define processes for OHS compliance within purchase agreements, e.g. Memorandum of Understanding with suppliers of goods to ensure that Goods meet standards when supplied.

Any initial purchase through the purchase order process should include a pro forma requirement for a pre-purchase risk assessment to be conducted. The outcomes of a pre-purchase risk assessment can be used to define any OHS system- specific requirements within the purchase order.

A review mechanism (administrative review) should be included as a process step and quality control to ensure suitable OHS requirements have been included in the purchase order documentation.

Skill and qualification requirements should be defined for people conducting pre-purchase risk assessments and performance reviews.

Requirements to be specified on purchase orders may include:

Use of goods and intended application
Scope of service to be provided
Standards to be met (where applicable)
Specific legislative requirements (e.g. provision of material safety data sheets - MSDS)
Additional requirements specific to the goods or services identified through risk assessment

The purchasing overview is continued in Part 2 of this document.

Self-Insurer OHS Annual Returns

Wed, 12 Jan 2011 10:05:00 GMT

Purpose

Licensed self-insurers must provide an Annual Return regarding statutory OHS performance information to the state regulator. The annual return is also benchmark information used as both raw data and to ensure that the self-insurer organisation has an effective program in place to evaluate its own OHS program effectiveness.

NOTE:A WorkCover audit does NOT replace the self- insurer’s annual self-audit and reporting requirements under section 189 of the Workers Compensation Act 1987.

Reporting requirements are defined under Section 189 of the Workers Compensation Act 1987 and allow for the regulator to require administrative practices to be conducted according to appropriate OHS reporting criteria.

The OHS annual return information is based upon:

Outcomes of an OHS self-audit program
OHS reporting requirements

OHS Self-Audit Program

Self-Insurers are required to conduct self-audits as part of their OHS assurance and continuous improvement framework. This requirement is consistent with auditable criteria contained within the WorkCover National Audit Tool (NAT) for audit verification activity to occur.

Administrative criteria for Annual Returns (in relation to OHS self-audit programmes) also define a requirement for appropriately qualified and experienced audit teams to conduct audit activity in accordance with AS/NZS ISO 19011 – Guidelines for quality and/or environmental management system auditing. This standard defines minimum qualification, performance and process criteria requirements for persons to conduct audit activity.

IMPORTANT issues with self-audits:

Reporting requirements are based on essential elements of best practice for self-insurers. If a self-insurer is unable to provide sufficient information to meet subject criteria, that may indicate an inability to meet the associated NAT criteria.

That situation may in turn impact on the self-insurer’s licensing requirements. In such cases, self-insurers should seek assistance from OHS consultants to deal with the administrative problems, and may also request assistance from the regulator in dealing with the statutory issues.

Self-insurers must submit self-audit results to WorkCover in their annual returns. The results of the audit activity are stated in the form of an executive summary which provides a clear and concise overview of the outcomes and information arising from the audit/s that have been conducted.

NOTE:This annually supplied information is based on the organisation’s current specific requirements for self-insurance audits and licensing issues for the period covered by the report and may be highly diverse and variable in different years, depending on the nature of matters like implementation of OHS practices, administration issues, etc.

Common Problems

There are several typical problems that are common with annual returns.

Continued failure to provide the annual return within the pre-determined timeframe This is an indicator to the statutory regulator that the self-insured organisation lacks resources and/or capacity to manage the self-audit and related functions.
Inability to provide, or insufficient information to meet reporting criteria requirements. These issues may indicate that there is a lack of understanding or implementation in relation to OHS management systems.
The correlation between management review, objectives and targets and health and safety plans do not demonstrate a systemic approach. It’s naturally important that information regarding these interrelated issues is properly structured at each stage of the annual return.
Inability to conduct the necessary functions and information gathering required to supply necessary information. In order to schedule materials required for an annual return, adequate resources should be allocated to provide information of sufficient scope and depth to cover organisational activities and prove that self-insurers are able to meet the essential verification activity requirements.

Anomalies within the annual return (e.g. reduced audit cycles or mid-term additional verification activity, or information indicating non-conformance with statutory requirements) may indicate a requirement for additional oversight by the regulator.

These problems can be corrected by seeking advice from OHS management system consultants. It is strongly recommended that organisations which are experiencing any administrative difficulties or having doubts about how to approach information requirements ensure that these issues are clarified ASAP.

It’s also advisable to inform regulators of any difficulties involved in preparation of reports. The regulator’s sole objective is to ensure self-insurers are fully functional and able to comply with statutory requirements. Regulators can also provide useful support and guidance with procedural and statutory issues.

Conduct of NSW Regulator Audits Part 2

Wed, 26 Jan 2011 21:28:00 GMT

The conduct of onsite audit activities is critical to the outcome of the audit. It’s important that self insurers take full advantage of the opportunity to engage with the regulator, ask questions and get advice and clarification where required.

Onsite audit activities

Activity	Actions
Opening Meeting	This activity is conducted on the first audit day to define the scope of the audit. An opening meeting may be held at appropriate sites where the scope of the audit covers more than one geographical location.
Site orientation tour	This very necessary tour is used to familiarise the auditors with the site, type of tasks and activities performed at the audit location.
Task/activity observations and Interviews	This is the general verification activity undertaken by the auditors during the course of the audit. This activity is required to provide measurable current information.
Debrief sessions after each verification day	Debrief sessions provide the opportunity for all parties to clarify the issues in relation to that day’s audit activities.
Close-Out meeting	Close-out meetings are conducted on the last scheduled day of the audit. This meeting is used to summarise the audit findings.

3. The local audit report

Following the completion of verification activities, the auditors will develop a local audit report on the last day of the audit.

The local report includes:

Audit Report Summary - The audit report summary provides an assessment of conformance (or otherwise) against the audit criteria selected.
Performance Level Matrix - The performance level matrix uses a numerical score to identify a percentage of compliance.
Corrective Action Request (CAR) - These are used to identify specific criteria in areas which existing self-insurer license holders were non-compliant.

4. Provide outcomes to the self insurer and S&SILB

Where non-conformances have been identified during the course of the audit activity, the designated lead auditor will require existing self-insurers to furnish a report back to WorkCover NSW outlining their intended strategies and providing reasonable timeframes for addressing any non-conformances or corrective action.

Following a review of the response from the self insurer by the lead auditor, a final report will be compiled for the Self & Specialized Insurer Licensing Branch (“S&SILB”). The audit outcome will be taken into account for license renewal for existing self-insurers or the granting of a self-insurer license for new applicants.

Audit standards

Self-insurer audits conducted by the WorkCover Audit Unit are performed in accordance with the AS/NZS ISO 19011 Guidelines for quality and/or environmental management systems auditing. This Australian standard provides detailed criteria in relation to audit methodology and minimum competency requirements of persons conducting audits.

NAT conformance issues

WorkCover Audit Unit auditors evaluate conformance/non-conformance against audible criteria within the scope of the audit. Evaluation is based on a numerical assessment of compliant criteria to determine a compliance score to a maximum of 100%.

The minimum scoring outcome acceptable is 75% conformance for each of the NAT audit categories audited.

In circumstances where self-insurer audit outcomes are unsatisfactory, (i.e. do not meet the minimum licensing performance standards), WorkCover may audit a self-insurer’s OHS Management System on a more frequent cycle.

Continuing unsatisfactory OHSMS performance may result in action being taken in respect of the self-insurer's licence. Where outcomes for new applicants are unsatisfactory, WorkCover will discuss options with the applicant concerning its licence application which may lead to further audit activity or the withdrawal of a licence application.

NOTE: Failure to comply with the provisions of the NAT will preclude the applicant from being granted a self-insurer licence.

Common Problems

Audit materials provided to auditors inadequate to meet auditable criteria.
Timetables developed for the audit verification activity and lack of sufficient guidance to meet the scope of the audit effectively within the audit timeframe.
Insufficient audit preparation of audit participants does not/cannot provide a reasonable representation of the self insurer activities.
Failure to adequately manage the audit processes whereby the audited organisation is unable to demonstrate compliance.

Conduct of NSW Regulator Audits

Wed, 12 Jan 2011 09:22:00 GMT

OHS management system audits are critical audits conducted by WorkCover NSW. These audits evaluate the OHS performance of an existing self-insurers. Applicants for a new self-insurer licence receive a preliminary audit to check conformance with requirements of the National Audit Tool (NAT).

OHS management system audits are performed by Inspectorate auditors on behalf of the WorkCover NSW Self & Specialised Insurer Licensing Branch (“S&SILB”).

WorkCover selects 2 strategic categories for the OHS Management System audit for existing self-insurers (3 for new applicants). Categories for audit are selected at the initial meeting between the regulator and the organisation, and are conducted within a defined timeframe prior to the scheduled audit (see below).

An audit timeframe is dependent on the type, industry and size of representative business sites to be audited, nature of risk of business activities and physical geographical locations of the organisation.

Generally, audit timeframes are:

Single self-insurer - four (4) days
Group self-insurer (including for new applicants) - five (5) days

Audit Process

The WorkCover OHS Systems Unit uses a rolling schedule of self-insurer OHS management system audits designed to ensure that audit activity is conducted within an approximate three year cycle. The rolling schedule is used to define timeframes for the OHS Systems Unit in processing OHS management system audits.

Phases of auditing are:

Notification and initial meeting
Conduct of the audit activity
Compile a local audit report
Provide outcomes to the self-insurer and S&SILB

1. Notification and initial meeting

Notification of audit dates to an existing self-insurer is given at least a minimum of six (6) weeks prior to the scheduled audit date. This notification is used as an initiator of audit activity between self-insurer and the regulator.

An initial meeting is conducted by a representative of the WorkCover audit unit (generally two weeks after notification) with representatives of the self-insurer. It is an expectation by the regulator that senior executives are present at this meeting.

The purpose of the initial meeting is to:

Define the parameters of the audit activity to be conducted
Obtain information in relation to OHS management system performance of the self-insurer
Ascertain the scope of the organisation’s operations (including geographical locations, work activity types and the number of employees at those locations)
Select the categories to be audited (one category each will be selected by the regulator and the self-insurer)
Confirm the organisation’s nominated management representative and contact details. (This liaison is very important. Self-insurers should ensure that an appropriately experienced senior person is selected for this role.)

IMPORTANT NOTE: For new applicants, the organisation nominates one (1) NAT category and WorkCover NSW will nominate 2 categories (OHS Management System as a mandatory selection category).

2. Conduct of the audit activity

The self-insurer (or new applicant) will be required to forward relevant documentation to the OHS Systems Unit for review no later than two (2) weeks prior to the audit date.

WorkCover Audit Unit auditors will evaluate the submitted documentation to determine the level of compliance (through desktop review) against the applicable NAT audit criteria. This outcome will provide the framework for the auditors to determine the scope of audit activity to be conducted. The auditors will then assess the level of implementation of the organisation’s OHS management system.

OHS Management and Contractors - Part 2

Fri, 07 Jan 2011 01:31:00 GMT

Critically important- OHS documentation

All documentation related to contractor OHS performance requirements must be statute-compliant. The scope of documentation required needs to be checked, and must be comprehensive.

Typical documentation for OHS management includes:

Site-based OHS plans – Very useful plans which allow a clear, systematic approach to OHS issues relating to a site or location and can be used to cover a large range of situations
Site specific procedures- Procedures designed to meet OHS requirements onsite, and provide valuable information in terms of reporting, management of materials, worksite safety procedures, etc.
Safe work method statements – Extremely important documents which set out in detail safe work processes, literally step by step. They should be issued to all people employed on site including management, and also relate to training requirements and site orientation.
Job safety analysis – A Job safety analysis (JSA) is a combination of a risk management assessment and safe work method statements. They’re often forms, which provide step-by-step detailed information to conduct a specific activity or task. A JSA is often extremely important in complex, high risk work.

OHS Site Induction

OHS site induction is one of the most important of all OHS functions. This is the best venue for instructing staff in depth regarding OHS. Induction is a formal, structured process, and the range and detail of the induction must be decided prior before commencement of work.

OHS site induction must include information in relation to:

The specific safety issues and requirements of the site, area or location
Work practices and procedures
Mandatory obligations and responsibilities, as applicable

Important: Some states and territories have mandatory statutory requirements for specific industry-related induction to be conducted prior to working in these industries. It should also be noted that lack of appropriate induction may incur legal liabilities in the event of OHS incidents.

Contractor monitoring, verification, and contract compliance

Monitoring and verification may be contractual/project-based or conducted through formal risk assessment built in to contract requirements.

Risk assessment can additionally be employed to modify the range and types of verification activity during the contract period using criteria for performance and statutory-related methodologies.

These activities can be of “custom” methods suitable for specific contracts or methodologies related to the work and statutory issues.

Monitoring and verification activities typically include:

Compliance audits (These are often essential in areas where statutory obligations include a range of mandatory procedures.)
Inspection and testing (Usually applied according to contract specifications and industry standards.)
Requirements incumbent on the contractor to provide information related to monitoring and verification activities for review.

Note: Monitoring and verification provide working quality controls in real time for OHS management. Reporting and communications functions need to be very well defined and comprehensive.

Record Keeping

Record keeping is a mandatory function of all self insurers in OHS management systems. This is quite specifically not a purely bureaucratic process, and information quality is very important in terms of liabilities and risk management. Established procedural requirements must specify the type, nature and methods of recording of OHS records to be maintained.

Records management must be in accordance with statutory requirements and the nature of information to be provided must be well defined. It’s very important that contractors are clear about these issues to avoid possible problems in compliance.

Typical mandatory requirements for record information include:

Qualifications
Certificates of competency
Operational information and data from monitoring (workplace activities, plant and equipment)
Hazard and incident reporting
Risk assessments
Training records

Note:

Failure to document qualifications and certifications is a technical breach of statutory requirements.
Hazard and incident reporting information is absolutely critical and covered by statutes in all cases. Hazards may include additional specific requirements for documentation.
Training records may have direct relevance to OHS incidents and statutory requirements. These records are an invaluable failsafe for contract managers to ensure training is conducted comprehensively and systematically.

Operations - Performance management and reviews

Organisations employing contractors need well developed performance review methodologies to assess performance in relation to contractual obligations.

Performance reviews may be conducted at completion of contract delivery or at specified times or milestones in a contract life cycle. Performance evaluation is designed to assess the contractor’s compliance with contractual and statutory obligations related to OHS.

Non-compliance issues

If a non-compliance issue is identified, prompt corrective action will be required.

These are typical situations in which non-compliance is common:

Preliminary meeting not held
OHS documentation inadequate, non-compliant, or missing
Appropriate OHS delegations are not made
OHS delegated responsibilities are not clearly defined
Monitoring is not carried out by competent persons in the course of contract operations

In these situations, it is advisable to conduct the steps outlined above as remedial action as soon as possible. Employers may also wish to evaluate risks before undertaking work in areas with deficiencies in OHS compliance issues.

OHS Management and Contractors

Fri, 07 Jan 2011 01:35:00 GMT

Clear appraisal, definition and enforcement of OHS practices in the contracting process are global best practice risk management.

OHS contractor management systems involve:

Establishment of clear contractual obligations for contractors regarding OHS.
Setting up appropriate OHS management systems to ensure integration of contractors with the employer’s OHS practices.
Operation of an appropriate reporting and monitoring system according to the specific OHS requirements of the location and the work conducted.
Verifying that the operations of the contractor are in compliance with OHS statutory and contractual obligations.
The case-specific requirements for administration of a contractor’s OHS performance must be established through formal evaluation of contractual and risk issues related to contracted works to ensure correct OHS management practices are in place.

Contractual OHS requirements

A contract must clearly define all operational criteria relating to OHS performance required for any services or works conducted by the contractor.

Appropriate OHS contract control mechanisms include:

Clearly defined obligations regarding statutory documentation (e.g. OHS management systems, site safety plans, safe work method statements and any matters requiring formal documentation, like hazardous goods, etc.)
Supervision and contract-enforceable oversight of works and site practices
Specifications regarding resources (e.g. the standards of supervisory functions required, provision for specialist operators, etc)
Provisions for contractor employer scrutiny, reports and record-keeping operations (Many OHS-related reports and records are mandatory)
Clear specific definitions related to the type of contract (e.g. trades and operator certifications, licenses, qualifications, traffic management requirements, PPE issues)
Any specific OHS requirements applicable to a service provider (non-generic arrangements)

Contract obligations are the basis of OHS management of contractors and should cover in detail all services to be provided.

OHS Management Operations

An important decision at the time of contract involves whether primary operational management of the site or project is to be performed by the employer of contractors or a legally nominated contractor.

This decision will determine the scope of management control in implementation of OHS obligations. (It should be noted that “who is responsible for what” is often a key factor in operational risk management, and that this decision must receive close scrutiny by employers.)

People in key OHS roles having delegated authority under this decision should be assigned in direct relation to the scope of the contract. People in these roles must meet statutory criteria for necessary skills, professional qualifications and experience appropriate to these roles.

Preliminary meetings

The basis for a preliminary meeting is to formalise arrangements for OHS operations for the contract.

The meeting may be either

Mandatory, relating to specified contractual criteria to be conducted prior to commencement of work
A necessary procedure after the award of the contract based on a tender.

The preliminary meeting is held between the contracting party and contractor to define and specify contract-related OHS criteria and operational processes. These meetings also function as setting-up procedures:

Establish reporting, liaison and record-keeping processes
Name key personnel and their delegations,
Allocate roles and people for contractor management
Determine methodologies for oversight and verification of performance.

Note: There are several issues in relation to these matters which are based on statutory requirements. The methods of reporting, record-keeping and requirements for delegation of OHS delegates are generally standardised, depending on the type of work involved in the contract and the employer’s industry.

Information - What a NAT audit won't tell you

Tue, 23 Nov 2010 09:05:00 GMT

OHS management system audits are conducted by WorkCover NSW to evaluate the OHS performance capacity of an existing self insurer. Applicants for a new self-insurer licence are also assessed on their compliance with requirements of the National Self-Insurer OHS Audit Tool (NAT).

Important- It must be noted that the NAT is not an OHS management system in its own right.

The structure and supporting criteria contained within the NAT are standard benchmarks by which it is judged whether an organisation has a compliant OHS management system.

The NAT, as used by the WorkCover auditors, defines the criteria that a state regulator will use to assess OHS Management Systems (OHMS) of self-insurers. The audits conducted by WorkCover NSW auditors are conducted specifically for the regulatory purposes of Self Specialised Insurer Licensing Branch within the WorkCover NSW Insurance Division.

These audits are based on the statutorily defined regulatory standards. (See sampling methodology section below). Auditors are drawn from the WorkCover Inspectorate and are a mix of permanent (unit based) and rotational staff.

Sampling methodology

Sampling is a research technique which uses selected information to obtain a representative view of a subject of research. For regulators, it also operates as an efficient “spot check”, because if one area is non-compliant, it’s likely that others may have related problems.

NAT sampling is based on a range of practical OHS operational categories like Consultation, Communication and Reporting, Structure and Responsibility, Policy, and related subcategories like Training and Competency, Reporting, etc. These are the working elements of OHS management, and the audit is designed to inspect and report on the status of these critical elements.

WorkCover adopts a sampling methodology approach whereby 2 categories are selected for the OHS Management System audit for existing self-insurers (3 for new applicants).

WorkCover auditors do not evaluate all auditable criteria contained within the NAT. The WorkCover audit unit attempts to use a more strategic, targeted approach to identifying applicable criteria for assessment.

Sampling methodology provides an overview of the capabilities of self insurers, dealing with specific OHS issues or subject areas and sometimes includes specific business areas or sites. The audit is effectively a quality control, targeting important functions of the self insurer’s OHS system and operations.

As the auditors are raised from the OHS Division (the enforcement area of WorkCover), consideration is also given to legislative requirements during application of the audit criteria.

This approach also provides information to the auditors as to the capacity of the organisation to meet specific legislative requirements in a structured manner as they apply to certain subject areas within the auditable criteria (e.g. confined spaces, hazardous substances or dangerous goods).

The framework for selection and implementation of the WorkCover auditors sampling methodology approach is based on a number of factors including the following:

Self insurers annual returns information
A review of notices issued by WorkCover to the self-insurer
A review of the prosecution database
Issues relating to the self insurer raise through general inspectorial activity
Information gathered during the initial meeting prior to audit

Audit outcomes and use

The NAT audit conducted by WorkCover NSW auditors is summarised in a final report compiled for the Self Specialised Insurer Licensing Branch. As a complimentary measure, the WorkCover auditors also provide a local audit report (Note: this is not the final report) based on verification outcomes during the course of the audit activity.

The Self Specialised Insurer Licensing Branch will take into account the information and recommendations contained within the final report for consideration of licence renewal for existing self-insurers or the granting of a self-insurer licence for new applicants.

Where issues identified involve non-compliance, WorkCover’s audit unit is obliged to notify the Self Specialised Insurer Licensing Branch. The WorkCover audit unit is also obligated to follow up and verify that any conformance issues raised by the audit have been completed. This function is carried out within timeframes that have been defined by the self insured organisation.

Organisational action

By definition, the local audit report provided by the WorkCover auditors does not provide a complete evaluation of the scope, quality and implementation of a self insured organisation's OHS management system.

The preface material contained within the NAT states:

conformance to the audit criteria alone does not assure compliance with all statutory obligations nor does it preclude any action by a regulatory body.

(By law, WorkCover can only deal with its own portfolio of legislation. Statutory powers do not permit regulators to take action or even advise outside these parameters.)

The WorkCover local report provided at the completion of the compliance audit activity provides information to a self insured organisation in relation to the benchmark criteria used by the regulator.

Important: This very useful information can assist in developing strategies to evaluate an organisation’s OHS management system. The audit information is particularly effective regarding development of targeted programs and assisting in assessment of systemic risk potential within business units affected.

However- NAT sampling can only cover the specific areas subject to audit. The WorkCover NSW audit cannot be a substitute for the in-house OHS management system audit activities that a self insurer should undertake themselves.

Common Problems

Examples of common problems in relation to the application of NAT audit outcomes are as follows:

Lack of understanding as to the requirements behind a WorkCover NAT audit activity: Self insurers should be fully aware of the statutory issues and operational requirements involved in OHS management in their industry and WorkCover’s role in ensuring compliance requirements are met.
A belief that the audit activity is being conducted for the self insured organisation: This is entirely incorrect. The NAT audit is simply part of the licensing and compliance enforcement procedures of WorkCover.
System requirements are developed to meet auditor criteria rather than organisational requirements: The audit is targeted to meet essential statutory criteria, and are naturally related to the organisation’s operational OHS needs.
Substituting WorkCover audit activity for a self insured organisation audit activity: This is a potentially disastrous misconception. The NAT audit only applies to at most 3 of the 15 major categories and multiple sub categories, all of which are covered by statutes. Self insurers must conduct full internal audits and monitoring of their own OHS management systems for best risk management.
Misunderstanding that a successful audit outcome does not demonstrate an implemented OHS management system across an organisation: The audit can only indicate success in the areas under inspection. The fact that a training and competency audit was successful doesn’t mean that the documentation, communications reporting and other areas are adequate.
An expectation that legislative requirements have been satisfactorily met as a result of a WorkCover audit outcome: The audit specifically covers the compliance issues of OHS management system related to WorkCover licensing for the areas audited. It does not relate in any sense to any other legislation.

If you’re in any way uncertain of the issues related to OHS management systems or WorkCover NAT audits, it is strongly advised that you seek independent assistance from professional OHS management consultants.

Steps to Self Insurance in NSW (OHS perspective)

Wed, 10 Nov 2010 08:24:00 GMT

Self Insurance is an administrative licensing arrangement, underpinned by legislation, to exempt employers from having to comply with specific statutory requirements regarding workers compensation policy coverage.

An employer with a self insurer's licence does not pay workers compensation premiums to a licensed insurer. They instead carry their own underwriting risk and control their own claims administration.

The licensing process is managed through the NSW WorkCover Regulatory Financial Services Group. The Self Specialised Insurer Licensing Branch within the Group facilitates the licensing process for both new applicants and existing self insurers.

Self insurers licences are issued for individual (singular company entity) self insurers and Group (company with wholly owned subsidiaries) self insurers.

There are three key assessment criteria that require satisfactory performance level to be demonstrated for an organisation to be considered for self insurers. Those criteria are as follows:

Size and financial viability
Developed injury management and return to work programmes
A developed and implemented OHS management system (OHSMS)

Formal application for self insurance is submitted with specific prescribed information contained within an information pack obtained from the WorkCover Self Specialised Insurer Licensing Branch.

Size and Financial viability

Applicants for self insurance must be of a minimum size with regard to the number of employees for consideration of the application to proceed. Current requirements define a minimum size of 500 employees; however consideration will be given to an organisation with fewer employees where they are licensed as a self insurer in another state.

A new applicant must demonstrate that they have a capacity for ongoing financial viability. The evaluation is conducted by financial analysts within the Self Specialised Insurer Licensing Branch to ensure that the financial position of the applicant is such that it has the ability to undertake the financial obligations of a self-insurer with enough capital to underwrite pay and manage their own claims. Information to be submitted includes annual reports and a company annual balance sheet assessed by a qualified actuary.

Injury management and return to work programmes

Applicants for the self insurer licence are required to demonstrate that they have developed an injury management program for the return to work of injured workers.

Applicants must demonstrate that they have a systematic approach to injury management and the necessary resources to implement and monitor the effectiveness of the processes and procedures described in the injury management program, including:

Proper administration processes for documenting, reporting and monitoring the return to work process
Procedures for re-integrating the injured workers (retraining on other duties, etc.)
Facilities for consultation and monitoring in terms of the medical status of workers and their suitability and levels of fitness for types of work.

WorkCover's Injury Management Branch will conduct a review of the organisation's injury management program and conduct a verification audit to evaluate compliance with legislative requirements for injury and claims management. The verification audit will also be used to evaluate implementation of the injury management program in meeting organisational needs and the capacity of the organisation to manage its claims.

The applicant must achieve a minimum of 80% conformance on key elements to achieve a satisfactory rating on the audit.

OHS management system

The Self Insurers OHS Systems Unit auditors within the OHS Division of WorkCover NSW will conduct an audit verification activity to assess the applicant’s OHS management system. The applicant is required to submit its OHS management system documentation and supporting information relevant to the audit criteria for a new applicant (refer information sheet titled Overview of regular audits for process detail).

WorkCover adopts a sampling methodology process whereby 3 categories are audited. One of those categories is mandatorily determined to be the OHS Management System.

A desktop review will be conducted of the submitted documentation. Following the desktop review, a determination will be made by the State Coordinator as to whether the documentation is of sufficient scope to warrant a continuation of a site verification activity.

Where a site verification audit is conducted, the auditors will determine the level of implementation of the auditable criteria.

The applicant must achieve a minimum of 75% conformance on the element criteria to achieve a satisfactory rating on the audit.

Important- This auditing is not a “rubber stamp bureaucratic process”. These audits routinely provide extremely valuable information to organisations, and can help identify serious (and sometimes multiple) risk management dysfunctions. Applicants are very strongly advised to give top priority to addressing all deficiencies identified by regulator audits, because they relate to absolutely crucial OHS management issues.

Applicant evaluation

Reports relating to the outcomes from the three evaluation activities conducted will be collated into a summarised final report. Where it is identified that the applicant has demonstrated a capacity to meet the performance criteria, the final report will be forwarded to the WorkCover Board for decision regarding the granting of a self insurers licence.

In circumstances where it has been identified that any one (or more) of the three areas evaluated have not demonstrated the performance level expected of an applicant, the applicant’s representative will be advised of likelihood that further progression will not be successful. (See below, Unsuccessful applications- critical matters.)

Licence issuance

Following the granting of a licence, the applicant must demonstrate ongoing performance at the expected standards for each of the evaluation areas. Performance will be reviewed on an annual basis using the self insurance annual reporting requirements.

The self insurer will also be exposed to cyclical audit activity of the injury management program, claims management and OHS management system implementation. Any failure of these operations may lead to action by the regulator requiring remedial action, or self insurers can face loss of their licenses.

Common Problems

Examples of common problems in relation to self insurance applications are as follows:

Progressing an application for self insurance without contact with WorkCover NSW representatives to determine specific criteria to be addressed in the application process. This lack of information is almost certain to result in failure of the application.
Under-developed injury management programs and OHS management systems. These areas are deficient by definition, and will require rectification before a licence can be granted.
A lack of understanding of the auditable criteria and their application in an organisational context. The OHSMS operates as an integrated system, and if some applications are ineffective or inappropriate, they impact the whole OHSMS.
A limited appreciation of the scope of verification activity to be conducted to determine compliance with self insurance criteria. The process of verification naturally includes evaluation of the OHSMS capacity as a whole to manage issues and will inevitably identify shortcomings in procedures and operational areas.
The management and facilitation of the application process. A common error is that applications are not conducted in a structured manner to ensure that all criteria areas are equally resourced to allow sufficient evidence to be gathered and presented in a systemic manner. This results in a series of failures in procedures at all levels.

Issues and considerations for organisations prior to application

It will be seen from these requirements that a reliable, functional OHMS must be in place in order to qualify for self insurance licensing. In practice, compliance with the statutory requirements may include a range of technical and legal issues which are outside the internal expertise of organisations to address.

Best practice is to ensure a well structured programme is created prior to application, using external consultants to construct an appropriate, “customised” return to work operational model and ensure proper conduct of the programmes. The programmes must be designed to deal with the onsite workplace realities and be designed to meet organisational needs and obligations.

Unsuccessful applications- critical matters

In the event of an unsuccessful application, organisations should be aware that the regulator’s audit has identified potentially major problems.

These issues may include one or more of the following:

Serious OHSMS flaws
Financial viability issues
Workplace risk management problems
Administrative deficiencies
Operational situations
Onsite problems.

Any of these issues may constitute a serious financial and legal risk to the organisation’s viability. A single OHS incident may cost millions of dollars in legal claims and/or fines. The best way to address these problems is to obtain professional OHSMS guidance immediately.

Overview of the National Audit Tool (NAT)

Tue, 26 Oct 2010 12:49:00 GMT

The National Audit Tool (NAT) has been developed in conjunction with federal and state statutory regulator representatives to provide consistency and harmonisation for OHS requirements relating to Australian self insurers across multiple jurisdictions.

he NAT defines auditable criteria (with supporting information) to be used by state regulators in conducting audits of self insured organisations.

Overview

The NAT provides informative criteria for self insurers in addition to the auditable criteria used for verification activities. This information relates to the application of the NAT in a broader context and provides detail with regard to the following subject areas:

Auditing Occupational Health and Safety Management Systems by Regulators: This is a “How To” approach to these important audits, explaining the methods and objectives of the NAT.
Audits, inspections and legislative compliance: Critically, it also explains that the NAT is not itself a workplace inspection system,.
Auditors: The NAT sets out the operational context of auditors roles, and cites The AS/NZS ISO 19011- Guidelines for quality and/or environmental management systems auditing as the audit standard.
Self-audit programs: The NAT sets out a practical framework for self insurers to create and conduct effective internal audits, including:

Establishing an audit team
Defining audit roles
Setting up a reliable reporting and documentation system
Creating an effective oversight mechanism which will enable proper assessment of conformance with regulatory requirements

The User Guide and Workbook are designed to provide regulators and self insurers with operational benchmarks and common references.

OHS Management Systems approach

The NAT, by its nature, requires that an OHS Management Systems approach is adopted by self insurers to meet the NAT’s auditable criteria. The NAT relates to operational principles, rather than setting out pro forma, specific requirements for auditable criteria. OHS management requirements for individual businesses can vary widely, and each organisation must create its own version of these audit processes, in relation to its circumstances.

The NAT is comprised of five key “Elements” with sub element components where more specific auditable criteria relate to a subject area. The identified elements are consistent with best practice contemporary management system structures and include the following:

Element 1: Health and safety policy

This element usefully defines the critically important areas of health and safety management and operational functions to which the organisation must commit itself.

These areas effectively create a comprehensive policy base, including:

Risk management
Health and safety legislation
Objectives improving injury and illness prevention
Health and safety training
Inclusive employee consultation
Dissemination of health and safety information to all people in the workplace
Effective implementation of organisational health and safety policies

It will be seen that each of these policy areas integrates into full coverage of essential OHS management practices. The idea is to create a fully functional, “customized” health and safety policy for organizations to manage themselves.

(NAT auditable criteria also include administrative arrangements in relation to access and maintenance of the Health and safety policy. )

Element 2: Planning

The Planning element includes very useful information and a good description of absolutely essential aspects of OHS management operations which must be addressed to ensure good practice. It relates directly to addressing legislative requirements that apply to an organisation systemically, identifying the tools used to achieve corporate objectives and targets through health and safety management plans.

Element 3: Implementation

Element 3 is an excellent example of how the audit process operates and targets key areas of functionality. It provide good reference points for self insurers to approach their own audits meaningfully and with due attention to the vitally important areas of policy and planning.

Implementation defines auditable criteria relating to:

People (resources, responsibility, accountability, consultation)
Administration (documentation, data control and operation)
Programs, tasks and activities in the workplace including risk management, risk prevention and mitigation, dealing with emergencies (e.g. Contractor selection, design control, workplace facilities etc).
Knowledge base (includes recruitment and contractors)
Training and verification of both competency and understanding of training (critically important for operations)
Communications, notification processes, consulting with staff and reporting (covers the entire implementation area to ensure effective operation at all levels)
Specific workplace needs and operational procedures
Risk management and risk elimination including public safety, hazard handling, identification, high risk permits and risk control plans
Maintenance, faulty plant and equipment and repair issues
Product risk controls and tracking
Emergency operations and response, critical incident management

Element 4: Measurement and Evaluation

This section of the NAT is a virtual map of references to management operations in relation to health and safety management. Measurement and evaluation relates to methods used to evaluate and verify workplace programs, tasks and activities continue to meet organisational needs. Provision is also made including:

Verification activities (including various types of inspections and audits)
Incident investigation (including causal analysis)
Dealing with corrective and preventative action
Records management (used to provide evidence and a mechanism for evaluation of content)
Legal issue management and conformance issues
Management of audits
Direct management interaction with the audit process

Element 5: Management Review

This element defines the role of senior management reviewing the performance of the organisation in meeting its legislative requirements organisational commitments. It also provides a requirement for actions to be developed to address improvements opportunities that have been identified as a result of this review.

Criteria application

The NAT itself defines structured auditable criteria for use by the relevant state regulator and those that participate in programs where compliance is required.

The NAT also provides criteria and useful information relating to the auditable requirement, to allow broader understanding of the scope of application to which the criteria relates. It effectively spells out the audit issues and functional requirements for self insurers.

Additional information contained within the NAT includes examples intended to be used only as guidance to assist in understanding some typical questions or evidence that may be used in the verification process.

Common Problems

Understanding and interpretation of auditable criteria appears to be a common issue where non-conformance is identified. Converting auditable criteria into a process requires an understanding of the application of OHS requirements in a practical context.

The most important function of the NAT Elements is to clearly describe a broad approach and identify critical principles involved in health and safety management. The NAT Elements are a good basic guide to OHS management issues, andalthough these issues have to be applied to specifically to organisations on a needs basis, the NAT provides a clear indication of structure and the basis of audit criteria.

NOTE:Conformance to the audit criteria alone does not assure compliance with all statutory obligations nor does it preclude any action by a regulatory body.

That’s a quote from the NAT preface materials. It’s strongly advised to seek professional guidance regarding these obligations to ensure all areas of liability are properly covered.

How to Develop an Internal OHS Audit Schedule

Tue, 12 Oct 2010 13:22:00 GMT

An internal OHS audit program is used by an organisation to evaluate the effectiveness of the procedures and processes used to meet OHS legislative and other statutory administrative requirements (e.g. self-insurance).

An internal OHS audit schedule is a considered approach by an organisation to identify the extent and methods by which to conduct OHS related audit verification activity. The internal audit is also global best practice in OHS management systems.

It’s also a vital internal quality check on OHS systems and operations. The internal OHS audit is a particularly useful management tool for ensuring that the OHS management is being conducted efficiently and properly at all levels.

A senior manager should actively participate in the internal audit to ensure currency of management information and proper critical organisation-wide scrutiny of administrative and operational functions.

Internal audit scope

The organisation will need to identify the types of internal audit activity to be conducted.

These can include one or more of the following audit activity types:

OHS management system (OHSMS) audit - system level
Procedural compliance audit - operational level
OHS legislative compliance audit - analysing compliance capability
Incident management
Reporting systems
Records management and documentation

A determination of audit types will be based on requirements defined within the OHS management system. Factors relevant to the audits may involve the level of maturity of the OHSMS, policy initiatives and implementation, and similar issues. The knowledge and understanding of key stakeholders within the organisation and Further organisational factors (e.g. number of sites, geographical locations, State, national or international application) may also apply.

Schedule considerations

Having identified the types of internal audit activity to be conducted, the organisation will need to consider the most suitable audit delivery options and scheduling. Best practice is a standardised, thorough and transparent methodology which provides clearly defined outcomes to compliment an organisation's business goals and objectives.

These considerations will include one or more of the following points:

Mandatory audit requirements (e.g. Defined by statutory authority) - These very useful audit areas may include self insurers annual requirements for audit activity to be conducted for inclusion in reporting requirements. The internal audit in these cases can also act as “radar” for management, ensuring compliance issues are under proper scrutiny.
Size of organisation and geographical locations - Consideration should be given to the different types of activities (and risk potential) within an organisation, similarity of activities at different locations to evaluate uniformity of application, geographical locations that may impact on audit schedule delivery. This approach additionally allows for targeting of areas related directly to policy implementation.
Identified high risk potential subject areas – These areas naturally have high priority in an OHSMS. Any high risk areas identified as a result of statistical analysis or management review require audit verification to assist in implementing strategic management.
Changes in legislation or organisational structure - Changes in legislation or organisational structure that may impact on the capacity to implement OHS requirements. (Note: Legislative changes usually include a time frame for compliance, and may involve significant modifications to the OHSMS. It’s strongly advised that all compliance issues are included in the audit to ensure management has adequate information regarding these matters.)
Resource base from which the organisation can allocate qualified and competent auditors to conduct the audit verification activity type – Requirements of the provision of internal or external resources depending on scope of activity to meet audit needs. The resource base must be able to deliver the necessary standard of auditing to ensure OHSMS efficiency and compliance.
Organisational planning and development cycles - Planning of audits to align provision of audit reports with review cycles. This planning is a particularly useful management tool which can ensure proper control and timeliness of operational data. The forward planning also ensures well integrated OHSMS reporting.
Prioritised activities (e.g. Based on risk evaluation or business need) which will impact on implementation of OHS requirements.

Internal Audit schedule detail

The internal audit schedule should be owned by a person who has authority to manage and review the implementation of the schedule. Senior management should have direct oversight of the process, to allow checks on audit functions and efficiency.

The internal audit schedule will provide, as a minimum the following information:

The type of audit to be conducted
The expected timeframe in which the audit is to be conducted
The lead auditor responsible for the audit activity
Location of the audit
Timeframe for final report

Common Problems

One major issue in relation to developing internal audit schedules is that they either do not meet organisational needs and/or merely aim to achieve a level of conformance with statutory body requirements of regulators.

This is quite inadequate, and may expose organisations to serious liabilities. To ensure a fully functional OHSMS which is capable of dealing with all OHS issues and meets the standards of both statutes and major legal claims, the organisation must ensure that the internal audit is conducted on a holistic, best practice, basis in which all areas of liability, risk management and OHS are properly audited. The OHSMS must achieve full coverage of all potential liabilities.

Conversely, the needs of internal audits may exceed the capacity of the organisation to meet the requirements defined therein. The organisation may lack the expertise required to deal with some areas of risk management. Any internal audit carried out on this basis will inevitably be inadequate, and can create a risk of serious deficiencies in the OHSMS.

Another key problem is to ensure that audit competency (either internal or external) is at a level to achieve a suitable outcome as defined within the internal audit schedule, e.g. There are serious risks in using auditors to conduct compliance audits without the necessary understanding in relation to legislative application of requirements.

It is absolutely essential that any audit of an OHSMS is conducted by auditors having:

The correct level of audit experience
Comprehensive experience in statutory compliance, including both self insurance regulatory requirements and any other relevant statutory issues
A strong knowledge base and resources, including relevant industry knowledge where applicable
Proper accreditation for the audit operations required

The safest approach to these issues is to obtain professional guidance. The best OHSMS consultants can meet all these criteria and can also provide ongoing support and services as required.

Self Insurers - What a National Self-Insurer OHS Audit Tool audit won't tell you

Fri, 08 Oct 2010 08:46:00 GMT

To define the audit requirements of self insured organisations at all levels, it’s necessary to detail the basic formats involved:

OHS management system audits are conducted by regulators to determine the OHS performance capacity of an existing self insurer.
Applicants for a new self-insurer licence are also assessed on their conformance with requirements of the National Self-Insurer OHS Audit Tool (NAT).

It should be noted that the NAT is not an OHS management system.

The structure and supporting criteria contained within the NAT are simply benchmarks determining whether an organisation has an appropriately structured OHS management system.

Put simply the NAT defines the criteria that a State Regulator will use to assess OHS Management Systems of Self-Insurers.

The actual statutory audit is conducted by the regulator’s auditors.

To provide some clarity on the context in which an audit is being undertaken, the licensing area is normally a client of the regulator auditors. This means that the audit activity results are essentially been gathered for the licensing and not specifically for the self-insured organisation.

The audit itself is a compliance-style audit conducted by the regulator auditors using defined auditable criteria selected for each audit. This is a far more formal and potentially complex process than the NAT audit tool implies.

Sampling methodology

The regulator uses a sampling methodology approach for an OHS Management System audit for existing self-insurers or new self insurer applicants. The regulator’s auditors use a strategic, very practical approach to assessment, based on the operational needs of the organisation’s license.

Important: It must be remembered that:

The regulator is obliged to deal with statutory compliance issues on a strictly formal basis.
Regulators have no “margin for error” in this area, and auditors must note any issues which arise from non-compliance.
Non-compliant OHS management systems are definitely not best practice, and can result in loss of the self insurer’s license.

The sampling methodology approach is based on measurable factors:

Annual returns information;
Regulatory notices issued by the regulator to the self-insurer;
Prosecution database information;
General inspectorial activity;
Information gathered during the meeting prior to audit.

Audit procedures

The audit process results in a series of administrative outcomes:

Auditors compile a final NAT report for the licensing area.
Auditors also provide a local verification-based audit report created during the course of the audit.
Renewal and granting of licenses are based on these reports and related recommendations.

In the event of non-compliance a different series of procedures occurs:

Where non-conformance is identified, the regulator auditors are responsible for a compliance follow up program
Self insurers are notified to address and remedy issues raised.
Auditors ensure that the remedial works have been completed within timeframes that have been defined by the self-insured organisation.
The licensing area renews or grants the license.

Important: Failure to comply with the licencing requirements may result in serious issues regarding an organisations continuation as a self-insurer.

Organisational action

It must be clearly understood that all statutory compliance issues in relation to self insurance are based on strictly practical requirements. Compliance is assessed on the basis of the workplace realities of the organisation.

The NAT preface information states:

"Conformance to the audit criteria alone does not assure compliance with all statutory obligations nor does it preclude any action by a regulatory body".

The local report provided to a self-insured organisation at the completion of the compliance audit activity provides information regarding conformance or non-conformance against the benchmark criteria used by the regulator.

This information is extremely useful. It can assist in a whole range of ways for developing an organisations' OHS management system. It’s particularly effective, with regard to developing targeted OHS operational functions, training, incident management, implementation and assessment of risk potentials.

The fact remains that there shouldn’t be any non-compliance issues. OHS statutes are the default best practice scenarios for workplace safety. These statutory requirements are anything but a “rubber stamp”, and should be respected for their contribution to the serious issues of workplace safety.

OHS management system audits should be good enough to ensure that a self-insurer can effectively evaluate the procedures and processes within the workplace. There should be no loose ends, and no “mysteries” regarding any part of the OHS operational issues.

Common Problems

Examples of common problems in relation to the application of NAT audit outcomes are as follows:

Lack of comprehension of the importance of the NAT audit process and its value to self-insurers
A mistaken belief that the audit is a service provided by the regulator
A purely bureaucratic response to a perceived bureaucratic process
System requirements are developed to meet auditor criteria rather than organisational requirements;
Substituting regulator audit activity for a self-insured organisation audit activity;
The extremely dangerous, asking-for-trouble misconception that the regulator’s audit can do the necessary work of a self-insurer’s OHS management system
The incorrect belief that all statutory requirements have been satisfactorily met by a regulator audit outcome. This is the exact antithesis of NAT’s own stated information.

The simple fact is that only a good, well-structured, well-managed, OHS system can ensure both full statutory compliance with all applicable laws and a safe workplace environment.

If you are in any doubt whatsoever regarding your statutory compliance, or have any operational issues with your OHS management systems, it is very strongly advised to seek professional guidance from professional safety management consulting services as soon as possible.

Self Insurance Statutory Audit Preparation

Tue, 28 Sep 2010 11:48:00 GMT

Statutory audit preparation is critical, particularly at the corporate level. It’s essential to have a full-spectrum statutory audit function in place at all times. Self insured businesses require a complete information system based on formal compliance criteria.

Preliminary Meeting

The usual process for statutory audits involves a preliminary meeting between the regulator and the organisation to be audited.

The meeting creates a format and working context for the audit and defines key issues such as:

Providing a knowledge base for the audit program and explaining the compliance issues;
Defining the audit functions;
Identifying which areas of compliance and/or locations are to be audited;
Scheduling the audit – Managing time frames, setting dates and specifying the audit functions to be carried out;
Clarifying audit standards and required levels of information to be assessed.

This meeting is a briefing, and is best practice for regulators, ensuring that audit subjects are fully informed of the regulator’s requirements.

Important: Senior managers should be present at this meeting if at all possible. If not, fully qualified senior level attendees must be substituted. Statutory audits can directly affect business operations, particularly business licensing. It is strongly advised that business management take advantage of this opportunity to ask questions and seek clarifications from regulators.

Planning Preparation

A structured, holistic preparation for the regulatory audit is essential. Each element subject to audit should be mapped, and a management program for preparation of information prepared accordingly. This approach also ensures there’ll be no missing information or other embarrassments when the audit is conducted.

(Note: Fully compliant reporting systems produce information in the formats required by regulators. Other systems may require reworking, which needs to be scheduled on your preparation plan to ensure completion prior to audit.)

Preparation should be carefully time managed, to ensure full documentation is available for the audit. Scheduling completion should also allow time for management review and any further work to be done well before the audit date.

Planning implementation

The preparation program should be managed by a delegated, fully qualified person who is fully aware of the entire range of audit issues. The preferred person is an OHS professional, or local manager with current OHS training.

Delegations for preparation functions may be given to appropriate individuals with expertise in the specific audit functions.

Delegation specifically should not be given to any person who’s in any way unsure or unfamiliar with the statutory issues, documentation and compliance requirements of the audit.

Planning stages:

Creation of a complete timetable for all audit subjects;
Defining the evidence and information requirements relevant to the audit;
Appointing participants in the audit preparation activity;
Creation of criteria to ensure preparations meets audit standards.

Audit information preparation

Quality controls on information provided to the audit must meet statutory obligations:

Information standards must fully satisfy the audit requirements.
The information should be acquired from documentation that has been prepared over a good representative timeframe.
Data must provide statutory indicators as required by law.

Audit site preparation

Areas subject to auditing must be assessed to ensure compliance with regulatory requirements. Supporting evidence should originate from sites to be audited.

Personnel preparation

Regulators use sampling methodology when conducting audit operations. A suitable number of qualified staff familiar with the issues at different levels within the organisation will be required to assist the regulators during the audit. Safety management consulting services can assist in organising staff to meet these needs.

Appropriate briefings should be conducted to provide:

A high level of knowledge of the audit subjects;
Good comprehension of the criteria to be audited;
Clarification of issues among the staff selected.

Facilitate the audit activity

It is extremely important that the preparation program actively assists in the audit process, providing good quality information for the regulator.

This approach provides:

Full management oversight of all areas subject to audit;
Direct benefits to the organisation, ensuring compliance at all levels.

Common Problems

It must be emphasised that the audit is a potential asset to the business.

Failure to meet audit requirements indicates the business self insurance licence is at risk.

Lack of direction and facilitation of the audit activity will also allow auditors to deviate from the scope of the audit activity to be conducted.

Selecting an OHS Consultant

Tue, 21 Sep 2010 08:26:00 GMT

Professional occupational health and safety consultants are essential for all businesses. They provide an independent, formal analysis of organisational needs and are invaluable sources of information and advice for helping self insured organisations meet their statutory obligations and OHS commitments.

Most organisations don’t have the required in-house levels of current technical and statutory knowledge to efficiently coordinate, implement and manage a fully compliant OHS Management System. An OHS management consultant is the strategic planning and operational link between organisation functions and the technical aspects of a health and safety management system.

All OHS practices and documentation must meet required regulatory standards and have a complete, audit-ready management system in place. OHS management consultants provide a full support service for businesses in this regard. Every aspect of OHS, including training, reporting, and compliance must be integrated on an organisation-wide basis. Best practice is to create a complete, customised OHS administrative system tailored to the needs of the organisation.

OHS management consultancy services

The occupational health and safety management consultant can provide advice and assistance across the spectrum of business needs, including:

Statutory compliance
Strategic and operational planning
OHS management systems setup, integration and implementation
Policy and procedural development
Hazard management issues and research
Building effective communication and procedural fluency
Design of functional OHS responsibilities and roles
Analysis of special OHS requirements and operational issues
Formal evaluation of OHS systems and compliance
Quality control - reporting, recording and analysis of OHS performance to ensure best practice
Development of fully compliant, efficient emergency and accident investigation processes

Critically important, OHS management consultants also provide real time assistance, and make sure mistakes aren’t being made in incident management. Most OHS management problems occur during the handling of incidents, and consultants can prevent serious issues from developing.

Selection Considerations

Having identified the need to engage a professional OHS consultant, it is important to identify the type of consultant who has the knowledge, skills and expertise required for the scope of work required. Many OHS consultants are industry-specific experts, and are invaluable for their depth of knowledge of industry law and safety issues.

This is an example of the criteria for selection:

Requirement	Consideration
Education	Clearly defined formal qualifications are mandatory at all levels of consultancy.
Experience	An appropriate level of experience, with clear delineation of services provided must be provided.
Special capabilities	Industry specialisation is particularly important, and is invaluable in most cases.
Professional associations	Most OHS management consultants are members of professional organisations, often including indicative membership of organisations relevant to the industry concerned.

Engaging the consultant

When seeking a safety management consulting service it’s important to provide enough information for consultants to evaluate the requirements of the organisation, estimate the timeframes and cost of the service. It’s particularly useful for organisations to clearly identify particular issues and specific needs in relation to the consultancy work at this point, which allows the consultant to include these important considerations.

A detailed proposal to be submitted by the consultant should outline:

The exact nature and scope of services to be provided
Management strategies, methodologies and practices
Resources necessary for the service
Criteria for achievement of objectives and targets

Selecting a consultant

Face to face meetings can be used to select the most appropriate OHS consultant. Businesses may request a meeting with the consultant who’ll be handling their program if selected, rather than a consultancy representative.

Common Problems

By far the majority of professional OHS consultants are dedicated, very highly motivated people with exceptionally strong levels of personal commitment to their roles.

However, in some cases consultancies may provide inadequate services.

These situations are entirely unacceptable and below professional standards:

Consultancy does not meet organisational requirements
The service provided is clearly inadequate
Consultancy lacks relevant experience
Consultancy does not provide sufficient resources
Junior consultants are assigned to complex technical work in which they’re out of their depth

It is very strongly advised that:

Organisations establish clear measurable standards of contractual performance for OHS consultancies.
Make their expectations clear and enforceable under contract terms prior to proceeding with any consultancy agreement.

Getting the paperwork right with self insurance

Mon, 13 Sep 2010 22:45:00 GMT

Paperwork may not make the world go round, but it can use up a lot of time and patience. For busy people, paperwork needs to be pinned down, and an efficient management system needs to be in place to do it. There are a few ways of doing this, internally and externally. The “admin factor” in self insurance requires a level of expertise, and management needs to decide the best fit for its operations.

Doing your paperwork in house issues

The main issues with self insurance administration are twofold:

Administration costs and efficiencies: There’s an obvious dichotomy for business in terms of administration costs in specialised areas. The work must be done, but it’s also resource intensive in some cases, particularly when the work is undertaken by in-house professionals whose jobs are designed to cope with workloads generated by the business. In house management may or may not be cost efficient, based on the requirements of the workload.
Accounts and financial management issues: Self insurance is a financial management issue, and it is necessary for the business to conduct its self insurance operations according to statutory requirements. Input from financial managers is required, and in-house reporting systems are involved. However, the justification of costs in terms of additional resources committed to paperwork is also a potential issue.

External support- A working option

External support eliminates any additional requirements on internal administration, while retaining the valuable reporting functions of the self insurance management scheme. External services provide all the information required for financial management, allowing the financial managers to deal with issues without the added burden of administrative costs and resource issues.

Expert assistance from risk management consultants also provides a very useful administrative backup for managers who need to deal with the sometimes complex issues raised by self insurance. The external support approach covers all angles seamlessly, creating a good ongoing management methodology.

Figuring out the best approach

Best practice for self insurance administration consists of several stages of development and related options:

Consultants are engaged to set up the self insurance programs and systems. They provide a full operational schematic. These consultants also provide a full range of monitoring and safety management system support service.
Businesses may administer these operations themselves, or retain the consultants for both administrative and advisory purposes.
Businesses that administer their own self insurance engage consultants as required to upgrade their safety management systems and undertake safety audits.

Option 1 is basically an outsourcing approach, eliminating the administrative costs and creating a working management system.

Option 2 may be appropriate for businesses which are able to manage the administrative issues but still require support and advisory services.

Option 3 is a compliance-based approach, ensuring both reporting and proper conduct of self insurance administration on a needs basis.

The best options are chosen for cost-effectiveness and a good fit with the administrative and financial management needs of businesses. External services improve self insurance management efficiency greatly, whichever option is preferred.