ISO 9000 Standards: An Emerging CPA Service Area

Since the 92-nation International Organization for Standardization (ISO) issued a set of standards for assessing potential suppliers' quality control systems in 1987, worldwide interest in the standards, known as ISO 9000, has virtually exploded. Sixty countries already have adopted ISO 9000. In the United Kingdom alone, over 20,000 plant sites are certified. ISO 9000 may have become the price of admission for doing business in the European Community. Increasingly, ISO 9000 is becoming the price of admission for doing business in the United States, too. In 1992, only 400 U.S. plants were certified as in compliance with ISO 9000. By July 1993, almost 1,500 U.S. plants had been certified. In all likelihood, thousands more U.S. plants eventually will seek to comply with ISO 9000 standards. A survey of midsized manufacturers released last November projected that as many as 10,000 plants could be certified by the end of 1994. Why should CPAs be interested in the standards? (1) CPAs can give their companies or clients a competitive edge by providing advice on this emerging domestic and international business issue, before certification becomes a standard business practice. (2) CPAs can expand their repertoire of audit services by becoming certified to perform ISO 9000 quality system audits. This article explains the regulatory and business reasons why companies seek ISO 9000 certification, describes the certification process and tells CPAs where to get information on obtaining certification to perform quality system audits.  U.S. companies obtain ISO 9000 certification for four reasons. 1. The EC legally requires suppliers of certain regulated products to have ISO 9000 certification. Regulated products are those that have important health, safety or environmental implications, such as medical devices, construction products or telecommunications equipment. Since about half of the more than $100 billion in U.S. exports to the EC are regulated products, this requirement has a significant impact on American companies. 2. ISO 9000 certification enables companies to compete for business from individual customers (both foreign and domestic) that contractually require their suppliers to be certified. This is not just an overseas issue. American companies such as Motorola, Xerox, IBM, General Electric, Eastman Kodak and the three largest U.S. automakers are beginning to require certification. The North Atlantic Treaty Organization and the U.S. Department of Defense also require suppliers to obtain ISO 9000 certification. 3. Certification enables companies to differentiate themselves from noncertified competitors. For example, Dow Corning sees certification as a way to establish a competitive advantage and has 12 certified sites. 4. Most important, many managers insist the process of creating, documenting and establishing the controls for a quality system actually is a catalyst for improving quality. For example, half of DuPont's 240 worldwide facilities are certified. At its Emigsville, Pennsylvania, plant, which makes plastic connectors for computers, employees claimed the defect rate fell from 30% to 8% as a result of participating in the ISO 9000 program. European DuPont sites reported benefits such as increased manufacturing yields and a decrease in customer complaints. In addition, Rockwell International's Allen-Bradley plant in Twinsburg, Ohio, improved productivity 21% and decreased cycle time and product defects by 18% and 32%, respectively, since obtaining certification.  ISO certification is not given to products or companies. It applies only to individual plant sites. Companies begin the certification process by selecting the most appropriate ISO 9000 standard. As exhibit 1, at left, shows, ISO 9001 is the most comprehensive standard and is intended for use in companies that take products from the drawing board to the consumer. …

Field of study: Business