Are you able to carry out a root cause analysis?

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By Jim McFie, a Fellow of ICPAK

The First Step Is To Obtain Evidence
Dennis Onyango, an advocate of the High Court of Kenya, wrote an op-ed in “The Standard” of
Friday March 17, 2023, the headline of which was “Why Africa might not make much progress this century”. Dennis opens the article by stating “Yes, current African regimes may be unaware of the law of causality: the relationship between cause and effect. That is to say, the qualitative consequences of any action will be harmonious with its nature”.

As you well know, it does not rain in Kisumu City: there, “precipitation falls from the sky”. I looked up the phrase “qualitative consequence” in Google: there is no definition offered. In Nigerian English,“qualitative” means “of high quality or excellent”. In normal English, “qualitative” means “describing the quality of something in size, appearance, value, etc.” “Harmonious” is defined as “marked by agreement in feeling, attitude, or action”. In ProWritingAid, the phrase “cause and effect” is explained by: “A cause is an action, and the effect is the resulting reaction. In the cause and effect relationship, one or more things happen as a result of something else.

A cause is a catalyst, a motive, or an action that brings about a reaction—or reactions. A cause instigates an effect. An effect is a condition, occurrence, or result generated by one or more causes. Effects are outcomes. Cause and effect means that things happen because something prompted them to happen. A cause is why something happens. An effect is what happened”. I go into this in detail because I find that many people see “an effect” but are unable to correctly arrive at the cause; and I myself frequently make that error. Analyzing cause and effect is one of the steps in a root cause analysis, often used in auditing,
but a method that can be used in many different areas of work.

When audit quality shortfalls are discovered, rigorous and thorough analysis is required to understand how and why the breakdown occurred, as well as how to ensure it does not happen again. Root cause analysis is the means by which the real or root cause of the breakdown is established; given this fact, it can be deduced that root cause analysis a crucial component of any audit quality assurance program. But root cause analysis can be used right across a business and even in one’s family and social life. The first step in a root cause analysis is to obtain evidence; this can be more difficult than it sounds. Why? One source of evidence is people. One has to establish who was involved, what roles did they play, and who else is knowledgeable about the event. One has to take care to determine who should be interviewed and who should be on the investigation team. One could argue that those directly involved in the event should participate as team members because they know the most about the event. However, any one of them may have been the cause of the event and that will make it impossible to arrive at the truth. One has to proceed with utmost care in selecting the investigating team.

The next step is to establish what procedure should have been followed in the “event” and confirm whether the established procedure was actually followed accurately and completely. If there was no established procedure for the actions that made up the “event”, one has to reflect carefully whether that was the best way of dealing with the matter, what improvements need to made and whether a written procedure guide needs to be prepared. Sometimes the laid down procedure is faulty: this has to be established with absolute precision and real thought has to be carried out to work out a changed procedure. Often systems are involved: the systems that were used have to be identified and their purpose and the role they played in the event have to be established. In addition, the work environment during which the event occurred has to be found. Undue pressure from clients can lead to errors being made and shortcuts taken; clients can sometimes be hostile or can deal with some members of a team
very amicably and with others very aggressively: this can cause a breakdown of the cohesion and the support structure of the team.

In a formal root cause analysis investigation, the next step is to prepare the problem statement, a one-page document that describes the problem being investigated, when and where the problem occurred, and the impact of the problem. Be careful to really think so that the actual and the potential impacts are contained in the statement and are documented. One has to document both the qualitative and quantitative impacts. In an audit problem situation, a qualitative impact could be a negative impression of the firm’s ability to produce a quality product. The loss of a client or an unplanned additional expenditure represents a quantitative financial impact.

Now comes the cause and effect analysis. One builds a model of how the problem occurred. It starts with the Focal Point, the feature of the problem that is the most important or the most strongly emphasized, which was documented in the problem statement. One must deconstruct it into its preceding causes. A cause and effect diagram of the problem can help to visually document the causes and their relationships. The easiest way to create the cause and effect diagram is by asking two questions: What caused the effect? And, every time that cause occurs, will it always result in the same effect? Follow-up questions to add additional clarity and detail are needed next. The key to building an accurate cause and effect analysis is recognizing that effects are generally the result of multiple causes. Cause and effect analysis is an iterative process which requires crystal clear thinking and logic – skills which are rare. Cause and effect analysis can be used where an outcome was successful so that that that desired result can be achieved again.

Let us go back to the beginning of the article for a moment: “A cause is an action, and the effect
is the resulting reaction. . . . A cause is why something happens. An effect is what happened”.
Solutions reduce risk by controlling causes. Any cause is a potential candidate for a solution. In reality, a diverse set of solutions is desired to minimize the risk of recurrence. Solutions need to be effective: they must control the target cause and break the causal chain. Theoretical “solutions” are useless: solutions must be implementable: a solution that cannot be implemented is not a solution. A solution must provide a positive return on investment: if a “solution” will cost more than the price of the “error”, there is no point in implementing the “solution”: there should always be a solid business case to implement the solutions proposed, based on the impact of the problem. Finally, a solution should not cause other problems. Think
carefully and logically about how the proposed solution could potentially create other problems: challenge the investigation team to identify creative solutions that will reduce risk for everyone involved in future similar events.

Finally, the findings need to be reported as concisely and precisely as possible. At a minimum, include the problem statement, a summary of the event, a list of proposed solutions, a list of team members, and any remaining tasks. Be sure to assign each solution to a person along with a due date. Plan to follow up to ensure solutions are completed and working as intended. And ensure that all who could benefit from the root cause analysis receive and read the report. I mentioned that root cause analysis can be used in many different spheres of operation of a business, and even in a family or social setting. But it is used extensively in audit. Audit quality issues are significant problems because they undermine trust: solving these problems offers valuable learning opportunities. Conducting a root cause analysis is the best way for people in the organization to learn and improve. Root cause analysis demands logical thinking, precise formulation of the problem, intellectual and practical honesty, and the courage to state the truth. With the right training, tools, and practice, competency can be achieved if the necessary effort is made.


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