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Effective date:
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Workplace Standards Audit Manual Effective Until
Replaced
Document Owner:
Social and Environmental Affairs (SEA), Program Operations Team & Field Operations Team
Author: Approval:
Social and Environmental Affairs - Program Operations Frank Henke, Global Director
Team Social & Environmental Affairs
Departments Affected:
Sourcing, the SEA Service Provider, SEA Auditors & External Monitors
Version Date Modifications Page
V2 September 2016 Auditor Impartiality & Conflict of Interest updated 4
Man-day guidelines adjusted to include integrated KPI 9
assessments

Contents
1 Purpose ......................................................................................................................................................... 2
2 Scope ............................................................................................................................................................. 2
3 Supply Chain Audit Coverage Models .......................................................................................................... 2
3.1 Internal Coverage...................................................................................................................................... 2
3.1.1 SEA Field Operations - Internal Monitor Requirements ..................................................................... 2
3.2 External Coverage ..................................................................................................................................... 2
3.2.1 External Audit Coverage Programme Management ........................................................................... 2
3.2.2 External Monitor (EM) Requirements .................................................................................................. 3
4 Fundamental Auditor Conduct ..................................................................................................................... 4
4.1 Procedure Implementation ...................................................................................................................... 4
4.2 Auditor Impartiality & Conflict of Interest ............................................................................................... 4
5 Audit Scope.................................................................................................................................................... 5
5.1 Site Coverage during Factory Audits ....................................................................................................... 6
6 Conducting the Audit .................................................................................................................................... 7
6.1 Methodology .............................................................................................................................................. 7
6.1.1 Audit Preparation .................................................................................................................................. 8
6.1.2 Audit Length .......................................................................................................................................... 9
6.1.3 Opening Meeting ................................................................................................................................... 9
6.1.4 Site Tour............................................................................................................................................... 10
6.1.5 Worker Interviews ............................................................................................................................... 10
6.1.6 Record Review ..................................................................................................................................... 11
6.1.7 Closing Meeting ................................................................................................................................... 12
7.0 Reporting ................................................................................................................................................. 12
7.1 Special Reporting Requirements ................................................................................................................ 14
8.0 Report Review & Designation Setting .................................................................................................... 15
8.1 Internal Coverage.................................................................................................................................... 15
8.2 External Coverage ................................................................................................................................... 16
8.3 Audit Report Sharing .............................................................................................................................. 16
9.0 Other Reference Documents .................................................................................................................. 16
10 Appendix 1 – Audit Process Documentation.......................................................................................... 16
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1 Purpose

adidas performs several types of audits to assess a factory’s compliance levels against the adidas’
Workplace Standards. This audit manual is designed to outline the scope of our audits, audit coverage
policies and guidelines for the conduct of SEA audits.

2 Scope

This manual, and its associated documents, are applicable to all audits conducted under the scope of the
Factory Approval Process as defined in adidas’ Factory Approval Standard Operating Procedure. This applies
to all audits conducted within the ‘Internal’ & ‘External’ coverage models. Any deviations in practice between
the two are recorded where applicable and additional documentation specific to External Coverage audits
can be found in the appendix.

Environmental Assessments are not included in the scope of this manual.

3 Supply Chain Audit Coverage Models

There are 2 types of audit coverage in the SEA programme: Internal & External Audit Coverage, further
illustrated below.

3.1 Internal Coverage

Internal Audit Coverage (Direct Supply Chain)

• adidas has a direct contractual relationship with the supplier
• Audit requirements are fulfilled by adidas’ SEA Field Operations team

3.1.1 SEA Field Operations - Internal Monitor Requirements

All SEA auditors under the SEA Field Operations team have relevant qualifications and experience to
perform their role and are able to demonstrate a comprehensive understanding of adidas’ requirements
and expectations.

For factories under Internal Audit Coverage, in cases where SEA resources are not available (i.e.
scheduling/workload issues for SEA Field Team members), Business Entities will be responsible, generally
at the supplier’s expense, for hiring an authorised External Monitor (EM) for any auditing, remediation and
verification needs.

3.2 External Coverage

External Audit Coverage (Indirect Supply Chain)

• No direct relationship exists between adidas and the factory.
• Product is sourced by licensees, agents and other supply chain intermediaries
• Approved External Monitors (EM’s) conduct compliance audits

3.2.1 External Audit Coverage Programme Management

Openview Service Limited is the nominated Service Provider (SP) in the Asia-Pacific (APAC) and Europe,
Middle East & Africa (EMEA) regions.
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This SP is responsible for:
- Assisting & authorizing External Monitor (EM) Audit scheduling (including selecting which EM will
conduct the audit);
- Reviewing audit reports;
- Communicating SEA’s designation decisions following an audit
- Tracking updates to a supplier’s Corrective Action Plan (CAP) in the Fair Factories Clearinghouse
(FFC) compliance database.

While the SP manages these responsibilities, SEA’s Programme Operations (PO) team oversees the SP’s
performance and implementation.

External audits in the Americas region are not currently within the scope of Openview operations and are
overseen directly by the PO team (see the Americas External Monitor Guidance in the Appendix for further
details).

3.2.2 External Monitor (EM) Requirements

In order to ensure that only experienced and qualified auditors are servicing our business partners, only SEA
authorised auditors can conduct audits on behalf of adidas . This means that the lead auditor must be
authorised by SEA. If an unauthorised monitor leads the audit, SEA, or the Service Provider where
applicable, will reject the audit report. While other auditors, not pre-authorised by SEA, can support the
lead auditor in performing the audit, SEA expects that the quality of their auditing and reporting reflect the
same high standards required of lead auditors.

In order to review the suitability of candidate auditors, the SP will require the following information:

1. Full name
2. Contact information (preferably auditors must reside in the country where they perform audits)
3. Résumé/Curriculum Vitae
4. Documentation detailing the auditor’s education/training (ex. certificates, foreign languages, etc.)
5. Records of relevant audit experience e.g. details of number of audits completed, locations, audit
types/schemes.

A lead auditor must meet, at a minimum, the following requirements:

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1. Auditor Experience: Three or more years of auditing experience and performing at least 50 social &
HSE compliance audits per year.
2. Certifications: Received training and has been certified either as a lead auditor or an advanced
auditor (or its equivalent) in: SA 8000 as a requirement (at the discretion of SEA, similar alternative
training may also be accepted e.g. Openview’s Social Auditor Training Course), OHSAS 18001 and
ISO 14001 as a preference. In the case of OHSAS 18001, if not completed at the time of approval, this
should be completed within 2 years.
3. External Standards Training: Received SEA training on labour, health & safety and environmental
standards and their international and local framework.
4. SEA Training: All lead auditors should have attended SEA or the Service Providers training on
adidas’ Workplace Standards and auditing methodology. Some exceptions may be granted
depending on the prior agreement with the Program Operation Lead in the region. This is pre-
determined based on consideration of the country, availability of SEA and the capability of Auditor.

In addition, SEA will take the following into consideration:

1. Other Brand’s Authorisation: Whether the auditor has been authorised by another brand to conduct
audits.
2. SEA Guidelines: The auditor’s understanding and familiarity with SEA’s Guidelines on Employment,
Health & Safety and Environment.
3. Languages spoken: Whether the auditor can fluently speak the languages of the workers and the
factory management.
4. Location: Whether the auditor is located in the country where the audit will take place.

SEA & the SP:

• May require that an external auditor candidate participate in an SEA audit prior to authorisation to
verify and observe that they understand and follow SEA’s guidelines and auditing procedures.
• Reserves the right to participate in and observe an audit conducted by any external auditor as part of
their initial and ongoing evaluation process.
• May place the auditor on probationary status or remove the auditor from the list of authorised
auditors if their performance is not up to SEA’s expectation or in the case of incidents that
jeopardize the auditor’s integrity (ex. bribery).

4 Fundamental Auditor Conduct

4.1 Procedure Implementation

• All SEA Policies, SOP’s and Guidelines must be followed strictly.
• When an EM fails to conduct an audit in line with the procedures outlined in the Audit Manual, SEA
has the right to refuse the audit report and to require that the audit is conducted again at the EM’s
expense. Examples include, but are not limited to:
o executing the scheduled audit without informing the SP;
o failing to get SP’s prior approval before the audit;
o an unauthorised auditor performing the audit;
o or instances of bribery on behalf of any party involved in the audit process

4.2 Auditor Impartiality & Conflict of Interest

adidas’ SEA field monitors, like all adidas employees, are held to adidas’ Code of Conduct, and therefore
may not directly or indirectly, neither in their country nor abroad, offer or grant unlawful benefits in
connection with conducting or scheduling an audit on behalf of adidas. This includes either monetary
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"kickbacks" or any other type of benefit (i.e. free products, favours, promise of future monitoring and/or
consultancy work).
Because of the important role SEA plays in safeguarding the reputation of adidas, we follow a policy which is
stricter than that stated in the company’s code of conduct. Our approach within SEA is that:

• We accept no gifts from suppliers or service providers, irrespective of the value.

• We normally decline dinner invitations or other forms of entertainment from suppliers, unless these
are part of a larger group dinners or functions being organized with Sourcing, or as part of a
function for visiting dignitaries, or general celebrations at a factory (e.g. an anniversary event).
• We would normally decline paid-for lunches, but it is permissible to eat with suppliers during
factory visits or if they have takeaway food delivered for working lunches.

The same principles apply to all authorised External Monitors.

5 Audit Scope

Under the SEA programme several different audit scopes are utilised as defined in the table below:

Scope Objective Scope of Audit

Initial To assess new factories All Zero Tolerance and Threshold Issues (ZT&TI),
Assessment against Zero Tolerance and Management Commitment Evaluation (MCE) and
(IA) Threshold Issues. Management System Evaluation (MSE) should be covered.
The factory must comply with all ZT&TI and major issues
under MCE and MSE to qualify for production.

Initial To determine whether the All ZT & TI, MCE and MSE should be covered similar to an
Assessment factory has remedied all IA. In addition, all the open issues from the IA must be
Follow-Up Threshold Issues which were assessed.
identified in an IA and that no
new ZT or TI’s exist. Scope used for all the second visits where the first
designation of the factory is either “SEA Rejected with
Second Visit” or “SEA Accepted--Subject to Conditions”.

Performance To monitor compliance in All code provisions including ZT & TI, MCE and MSE must be
Audit (PA) existing suppliers against all reported on. All the open issues from the previous audits
areas of adidas’ Workplace must also be assessed.
Standards & Guidelines

KPI To evaluate the factory KPI rating and the scores for each Units of Measure i.e.:
Assessment according to the seven Units 1. Management Commitment and Responsiveness
of Measures (UOM) in the KPI 2. Management System
Tool & the Sustainability 3. Labour & Industrial Relation
Leadership criteria 4. Compliance Training for Workers and Management
5. Transparency in Communication & Reporting.
6. Compliance Performance
7. Sustainability Leadership

Within the External Coverage model, approved EM’s will primarily be selected to conduct IA’s, IA Follow Ups
& PA’s. Selection will be based on the criteria below:
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Audit Type Initial Assessment (IA) Initial Assessment Follow Performance Audit (PA) &
up (IA-FU) Threshold Issue (TI) Follow
Up Audits
Approved EM selected by Approved EM selected by SP
SP based on: based on:
Who performs
Approved EM selected by SP
the audit?
Alternative EM to the one Alternative EM to the one that
that performed the IA. performed the last IA/PA.

5.1 Site Coverage during Factory Audits

As an over-arching principle, all facilities under the same Business License should be covered. However,
there may be some cases, as outlined below, where an adapted approach may be required. These will be
considered on a case-by-case basis and must be approved by SEA prior to the audit.

When our factory is in a multi-level building1:

• The auditor should try to cover other floors in the same building in terms of the building’s structural and
fire safety. Sometimes, other owners might not grant auditors access. In such cases, auditors should
check the walls, windows, hallways, stairs, elevators, etc. in common areas to get an overall impression
of fire and structural safety of the building. As a best practice, auditors can ask for permission to go into
the facilities on other floors to have a quick check of fire and building safety.

• The auditor should cover other facilities in the same building if they are involved in a vertical production
set up with the primary adidas supplier factory. For example; a printer on the 4th floor needs to be
audited if they are doing the print work for the primary factory on the 2nd floor, even though the
management of the two facilities are different.

When there are multiple buildings on the same premises that belong to the same management:

• The auditor should cover all the common areas including cafeterias, dormitories, chemical warehouses,
etc. which are used by all the workers from different buildings. Regarding common areas, a walk-
through is not enough. The auditor needs to check the documents of the workers employed in common
areas and also include them in the interviews. (For example; workers employed in the cafeteria,
warehouse, clinic, etc. would fall under audit coverage.)

• The auditor should cover the other buildings only if the production in the other building is related to
adidas’ production (i.e., vertical set-up production in between the buildings). (For example; an
embroidery section in the next building is used by the primary factory would fall under audit coverage.)

• The auditor should cover the other buildings only if there is swapping of workers between
buildings/businesses.
If the other buildings in the same premises do not fall into any of these points, then a written commitment
from the factory’s top management is needed to confirm that the production for the adidas’ brands is fully
dedicated to only a specific building/s with no vertical production occurring in any other buildings, no
common areas used by the workers from other buildings, and there is no swapping of workers between
buildings/businesses.

1
In Bangladesh, we do not accept multi-level buildings
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6 Conducting the Audit

This section includes guidance for the auditors to prepare, to conduct and to report an audit. It provides
ideas about critical message points and areas that do need to be covered by an auditor during an audit

Further audit methodology tips and tricks can be found in the appendix.

6.1 Methodology
Experience shows that non-compliances vary by region and country - and even by factory. As a result,
auditors will need to formulate specific assessment methodologies that most effectively cover the relevant
conditions and assist factory management and workers with implementing the Workplace Standards.
However, the components of an audit generally follow this standard practice:
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6.1.1 Audit Preparation
Auditors should follow their own methodologies and practices for preparing for the audit. However, adidas
also expects auditors to review, and be knowledgeable of, the following as part of their audit preparation.
Local Law • Auditors should be fully aware of the conditions, challenges and issues
prevailing in the country, region and industry where the audit is to be
conducted.
• Auditors should have requisite knowledge of local law and to understand
common areas of non-compliance and areas of concern to workers.
• It would be useful for the auditor to gather the relevant code regulations and
have them available as a reference in the audit.
Workplace Standards • The auditor should have a strong understanding of the Workplace Standards
and understand where adidas’ requirements are stricter than the local law.
SEA Country Risk • Provides special guidance on the following high risk issues:
Mapping ➢ Issues particular to a country;
➢ Common areas of non-compliances in the country;
➢ Common areas of non-compliances found in audits at existing business
partners;
➢ SEA requirements for the country that go above local labour law.
SEA Guidelines • Detailed guidance and case studies of common non-compliances and best
practices contained within the:

➢ Health & Safety Guidelines

➢ Employment Guidelines
➢ Environmental Guidelines

All these documents are available on the adidas’ “Sustainability” website:

(http://www.adidas-group.com/en/sustainability/supply-chain/standards-and-
policies)
Additional guidance documents, such as the Fire Safety Guidance Note & the
Boiler Guideline, should be reviewed and can be downloaded from the Fair
Factories Clearinghouse (FFC) under Standard Documents.
Supplier Self- • Contains information on working hours, wages, safety & health and policies and
Assessment permits, number and language of workers/management, number of buildings
and floors.
• Auditors can use the information to develop a risk profile of the factory and
focus on the biggest risks of non-compliance with ZT and TI requirements
during the audit.
Supplier Open Issues • Before visiting the factory, auditors are expected to check the factory’s account
List in the FFC regarding the open issues from all previous audits.
• The factory is required to provide a CAP update and status of open issues with
relevant evidence and completion date of remediation. High priority should be
given by the factory for non-compliances open for more than 3 years and
Threshold Issues open for more than 1 year.
• Check records of any worker complaints and/or incidents recorded in the FFC,
and follow them up during the audit. For External Monitors, the SP will share
any such cases with the EM before the audit takes place.
External Sources • Check any local NGO and/or media coverage of the factory concerned.
FFC Data Cleansing • Review key FFC factory account, sourcing group and self-assessment data to
ensure all information is completed and up to date. Use the pre-audit checklist
in the FFC to ensure that all fields are completed and accurate before
conducting an audit
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6.1.2 Audit Length

The length of time to be spent onsite conducting an audit at a factory falling under the Internal Coverage
model will be decided by the relevant Field Operations team member. This will be based on the risk profile
of the factory concerned and the team member’s professional judgement.

However, External Monitors are expected to follow the audit man-day guidelines detailed in the table below
based upon the number of employees in the factory.

In all cases, all audits must take place at times where the factory is fully operational, therefore, the auditor
should consider this in their preparation and confirm the operational status with the factory management in
advance.

Audit Man-day Table

Number of
1-350 351-1000 1001-2000 >2000
Total Workers
Audit Man-days 1 2 3 4

Note: if a KPI assessment is combined with a PA then an additional man-day can be added to those listed
above to allow for the additional content.

6.1.3 Opening Meeting

The Opening Meeting provides an opportunity for the auditors to introduce themselves to the factory’s
management and to explain the audit process. In the Opening Meeting the auditors should:
•
Opening Meeting
• Conduct: in a language understood by • Provide:
management. - An audit itinerary so factory management
• Invite: can arrange relevant persons to be available
- Factory owners, general manager; and cooperate.
- Compliance Manager • Advise:
- Other relevant employees, whenever - Management that unrestricted access to
possible, from; records or documentation, supervisors and
o Human Resources workers and all areas including the shared
o Health & Safety facilities being used by the factory is required
o Production & Planning to fully assess working conditions.
o Trade union or worker - That pictures will be taken of the site and
representatives. used where necessary to illustrate certain
non-compliances where identified.
• Show: - That denial of access will disqualify them
- The Access Letter to factory management (if from being a business partner.
the audit is unannounced & conducted by an - Management are expected to protect all
External Monitor). employees who participate in the audit
• Explain: process from any form of retaliation.
- The purpose of the visit, expectations and • Inform:
how the audit will be conducted. - Management on how and when findings will
• The audit scope i.e. if an Initial Assessment or be communicated.
Initial Assessment Follow Up, it will focus on - Management that if they become an adidas
whether the factory meets the preconditions supplier, on-going compliance with the
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necessary to qualify as a supplier to the adidas’ Workplace Standards is required to
adidas (i.e. Zero Tolerance and Threshold be eligible for production orders.
Issues). • That on-going annual audits will be conducted
to assess the factory’s compliance
performance with all of the Workplace
Standards and benchmarks.

6.1.4 Site Tour

The site tour, or factory walk-through, should include all production & storage areas, maintenance and
electrical rooms, boilers, compressors, generators, transformers etc., communal facilities, dormitories etc.
where present. This can also include, where deemed relevant by the auditor, a perimeter survey.

6.1.5 Worker Interviews

Worker interview selection criteria:

• A broad range of the workforce should be selected, including potentially vulnerable workers and those in
less skilled positions.
• Workers selected for interviews should reflect the factory’s overall workforce in regards to: gender, age,
ethnic, national, linguistic, migrant or religious groups, different contract types such as permanent vs.
temporary employee status, agency workers, years of service for the factory, from different departments
within the factory, including security and canteen workers as well as production workers, different
designations, for example rank and file workers and supervisors etc.
• Workers should be selected from different parts of the factory’s premises (ex. workers from different
buildings, floors or lines, etc.) & if possible from different shifts.
• Interviewees should only be selected by the auditor and never by the factory’s management.
• If the factory is unionized, or if there is no union but a formalized worker representation system is in
place, it is important that leaders of the union/worker representatives are interviewed.
• Workers should be selected as close to the interview time as possible with little advance warning to
either the worker or the factory’s management.

Internal Field Operations auditors will decide on the number of interviewees according to their professional
judgement.

However, External Monitors are expected to follow the minimum interview sample sizes below:

Minimum Number of
Number of Workers
Worker Interviews

1-350 10

351-1000 20

1001-2000 40

>2000 60
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The auditor who conducts the worker interviews should:

• Where possible, be of the same gender as the majority of the factory’s workforce.
• Conduct interviews in a variety of settings as they deem appropriate in regards to the issues being
discussed (ex. one-on-one interviews; group interviews; etc.)
• Conduct interviews in a private environment close to the production area in which the workers should
feel comfortable.
• Conduct off-site interviews and/or surveillance, where deemed necessary or beneficial by the auditor,
near but outside factory premises, as needed, to ensure that workers can speak freely without the
presence of factory management and/or check if factory is having its weekly rest days or letting workers
get out of their dormitory on their off hours.

Unless unavoidable or agreed in advance with SEA, translators should not be used support interviews with
language groups which make up 50% or more of the workforce. In these cases, the auditor should be a
native speaker of the language concerned. In cases where there is a multi-lingual workforce, auditors may
use a translator to access the views of workers from minority groups.

The protection of workers is of priority, therefore, any problems raised by workers need to be discussed with
management in a non-attributable way in order to protect workers from retaliation. The names of workers
involved in identifying an issue should never be divulged to the factory management. The auditor is expected
to keep a confidential note of who is being interviewed and to leave a contact telephone number with all
workers interviewed so they can later make direct contact with the auditor if necessary, in addition to having
access to adidas’ Worker Hotline.

6.1.6 Record Review

Auditors should review all factory documentation necessary to verify compliance with ZT and TI
requirements. This includes but is not limited to:

▪ Payroll and records of time including legally mandated benefits.

▪ Safety trainings
▪ Machinery maintenance, fire equipment and hazardous materials
• Relevant licenses & permits.

SEA requires that a factory’s timekeeping and payroll records must be accurate and reliable in order to
verify proper wage payments and sustained factory practice – please refer to the table below.

Auditors should also respect certain countries’ laws that prohibit the photocopying of certain personnel
documents (ex. social security card).

Record Review – IA Record Review – PA

• Min. 3 months in the previous 12 months.
• 1 month from peak season; 1 month from low
• Min. last 3 months’ of records.
season; 1 month with public holidays.
• Preferably more within the last 12 months
• Best practice to review the last 12 months
records.
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6.1.7 Closing Meeting

Prior to the closing meeting, a ‘pre-closing meeting’ should be held to allow the auditor/s to collate all
findings, analyse the evidence gathered during the audit (interviews, document checks, employment site
tour) and identify inconsistencies, non-compliances, observations, and good practice. An analysis of the
findings of the audit should be completed before the closing meeting even if the audit was completed by one
auditor.

The Closing Meeting allows for the auditor to provide the factory management with an overview of the day’s
events and the findings from the audit, as well as to assess and obtain the management’s commitment and
capacity to correct any areas of non-compliance. In the Closing Meeting the auditor should:

Closing Meeting
• Invite: • Provide an overview of the day’s events.
• Factory owners; • Review primary findings, both positive and
• Senior management, whenever possible, negative, with factory management.
from; • Highlight, and urge prompt remediation of
- Compliance longstanding unresolved non-compliances
- Human Resources (more than 3 years) and Threshold Issues
- Health & Safety (more than 1 year).
- Production & Planning • Discuss any open worker complaints.
• Trade union or worker representatives. • Assess the management’s commitment to
comply with the Workplace Standards.
• Ask any pending questions needed in order to
fully complete the “Management Commitment
and Systems” section.
• Provide an overview of possible next steps.
• External Auditors Only
• Ask factory management for their ideas on preliminary remediation steps and document them in
the Corrective Action Plan (CAP) template, each step is expected to provide an estimated finish
date and responsible person and the document should be signed by the factory management.
Please refer to Appendix A for the CAP template.
• Factory management will be interested in understanding the next steps in the process; please
note, it is SEA or the Service Provider to determine the outcome of the audit, and the authorisation
for production - so do not provide a response on this either way.
• Advise the factory management that, in order to verify that Threshold Issues have been remediated
in a sustainable way, it is necessary in some cases to conduct a follow-up audit on the condition
that:
• The factory has reported in writing that the remediation has been finished.
• 3 months’ records are available demonstrating compliance.
• Advise Factory Management that SEA is conducting an EM Audit Survey to factories to improve the
audit process as per SEA expectations and that the Service Provider will contact them shortly after
the audit.

7.0 Reporting

The findings for all audits are reported through the Fair Factories Clearinghouse (FFC) and should be
submitted within 7 business days from the audit date. For reporting to be considered ‘Complete’ in the FFC
the following must be submitted:
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• New FFC audit report record with the current compliance status of all Zero Tolerance, Threshold Issue,
MCE, MSE, and non-compliances entered with sufficient detail.
• The signed Corrective Action Plan (CAP) Report from the closing meeting (External Monitors only).
• Photo File – these are photos of the production buildings and general environment that help provide an
overview of the facility.
• Any other relevant supporting evidence (auditors will need to upload solid evidence as a source of finding
such as photographs, photocopies of documents reviewed) in the relevant code provision in the CAP.
• Existing open issues from earlier IA/PA’s (if applicable) are updated recording their current status i.e.
actions taken to date, verification status under the “Action Verified Details” section of the last audit.

All of the above should be delivered in English with documents such as the Corrective Action Plan (CAP) also
delivered in the language of the management, wherever this is possible. SEA reserves the right to reject an
audit report and/or remove the External Auditor from its authorised auditor list if any of these items are not
recorded in the FFC.

Completing the FFC Audit Report:

The FFC User Guide provides full guidance on how to complete the report in the FFC. However close
attention should be paid to the following points:

Code Provision Score Explanation

All “Required” Code Provisions All of the ZT & TI Code Provisions For all “Required” Code
must be answered. These cover must be marked as Pass or Fail. Provisions provide:
all:
• Zero Tolerance Management Systems & • A detailed description or
• Threshold Issue Commitment Evaluation must be explanation of the score given
• Management marked with Yes or No. for all Pass, Fail, Yes, No replies
Commitment & • Check all sources used to verify
• Management Systems The use of the “No Finding” score the finding.
Evaluation is not accepted for the required • Provide a detailed description of
code provisions. the sources/evidence used to
Additional Code Provisions not verify the finding. (For example,
covered above can be added to For focused audits where the where the interviews are the
record minor non-compliances. auditor is investigating a specific source, the auditor should note
topic, it is acceptable to score the details including: how many
uncovered TIs as N/A persons were interviewed, how
many verified the non-
compliance, etc.)
• Where the score is “Fail” or
“No”, both the ‘Root Cause’ (ZT
& TI only) & the ‘Company Plan
of Action’ should be updated as
well.

Notes for Reporting:

Confidential Worker Information: The report should not include any information that could be used to
identify specific workers – such as names, ID numbers, job descriptions and/or work location. In exceptional
circumstances when the best interests of affected workers (i.e. under age workers) are served through
disclosing their identities, or where there is information that is too sensitive for the audit report, the auditor
can provide details within the “Confidential Summary” of the FFC report. The same can be used for
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concerns, which cannot be substantiated through evidence and/or interviews or to report the attitude of
management towards the non-compliances or the audit process as a whole. For External Auditors, in the
case of evidences in pictures containing sensitive/restricted information, please send it to the Service
Provider.

When the audit report has been completed in the FFC, in the case of External Coverage Audits, the auditor
should notify the SP immediately.

Note: All audits need to be conducted within the required time frames. If the audit could not be conducted on
time, then the relevant SEA staff needs to put an explanation into the designation comment field in the FFC
about the reasons of the delay.

7.1 Special Reporting Requirements

Issue Type Reporting Expectation

Critical issues including but not limited to:
• Those which present imminent risk to When identified by an External Monitor, the EM should
workers’ safety/risk to life and limb. follow the instructions on the External Monitor (EM) Alert
Or Sheet and send a copy of the Alert Sheet to the Service
• Constitutes a significant breach of Provider right after the audit whenever possible, and
workers’ human rights. within 24 hours at the latest. Please refer to the appendix
Or C for more details about the Alert Sheet.
• Instances of unauthorized production,
bribery, denial of access or an attempt Internal SEA auditors will follow their normal reporting &
to pervert the course of the audit escalation process within the SEA team.
through fraud, coercion, deception or
interference.
The description of violations should at least contain
assessment on below factors to determine general
Excessive Overtime practice as threshold issue:
- the percentage of workers affected
- the weeks when violation found in the past year
- the highest working hours
When child labour is found, the auditor should provide as
much of the following information:
• Obtain the names of all child workers with clear
identification so that checks can be conducted to
ensure none of them are being dismissed.
• Verify the worker(s)’ age and the numbers of child
labour
Failure to manage existing child labour • Try to find the reasons why they are working in the
problems factory
• Any hazards at their working position
• Check HR policy to find why child labour was hired
• Find out why are they not in school and what is the
family situation
The auditor should also communicate to the management
the expectation that they should remove any underage
worker from work station immediately and move them to
safe place. Management should provide a clear
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explanation to workers for their understanding and obtain
assurance that no children will be dismissed.
When banned chemicals are discovered, please provide as
much of the following information as possible:

• Floor plans (of the work area, and its adjacent areas,
where the banned chemical(s) are used)
• Photos (the entire ventilation arrangements, its
peripheral facilities workstation, workers, etc.)
• List of chemicals used the production process
(chemical name, volume) and the inventory list (See
Use of banned chemicals or restricted
APPENDIX D)
substances
• Location and layout plans of exhaust ducts / systems
• Direction of airflow at the entrance to production room
• Design specification / manual
• Maintenance plan and records
• Installation of abatement device
• Testing report ( ambient concentration & occupational
exposure level )
• Record on the selection process for PPE and the
distribution record
• Record of chemical use mapping.

In cases where the major items within MCE and MSE

sections have negative findings, the auditor can give a
failing score to the Threshold Issue relating to
Management Commitment and Systems Management Attitude and System.
To further support the commitment evaluation, the CAP
that was reviewed during the closing meeting should be
signed by both EM and factory management and uploaded
to FFC.

8.0 Report Review & Designation Setting

8.1 Internal Coverage

For Internal coverage factory audits, reports will be uploaded to the FFC and the SEA Approval designation
updated and communicated to all Sourcing Organisations within 14 business days.

Following the audit, SEA will send the audit findings summary to the factory and sourcing and request the
factory to develop an action plan. This may also include a request for a follow up meeting to review the
action plan.

During such a follow up meeting it is expected that:

a. The factory presents the action plan and revises and agrees the action plan as necessary based on
feedback from SEA team.
b. Discusses the root causes of major issues found.
c. The factory records the minutes of the meeting to ensure they capture all important points
discussed.
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SEA will then periodically review actions taken by the factory, and progress made as per the updated action
plan. Where there are any deviations, SEA will provide suggestions/guidance for the factory on continuous
improvement.

8.2 External Coverage

The SP, within 10 business days from being notified that the report is available in the FFC, will review the
findings from the audit and determine the final designation. Further consultation may be necessary with the
SEA Senior Manager/Regional Director, SEA Lead Champion, and/or Sourcing.

The SP will then follow their process, as outlined in their own procedures, for communicating the approval
designation to the factory and sourcing.

8.3 Audit Report Sharing

On completion of the audit report review by the SP, the auditor will be instructed to prepare the report for
sharing in line with the instructions contained within the FFC User Guide, “How to share the report”.

9.0 Other Reference Documents

In addition to the documents provided in the appendix, auditors should ensure they are also familiar with all
other applicable SEA documentation including those listed below:

Document Audience Location

Employment Guidelines SEA team & External Auditors FFC Standard Documents
Environment Guidelines SEA team & External Auditors FFC Standard Documents
Fire Safety Guidance Note SEA team & External Auditors FFC Standard Documents
Health & Safety Guidelines SEA team & External Auditors FFC Standard Documents
FFC User Guide All FFC Users FFC Standard Documents
Off-Site Interview Framework Internal SEA Auditors Offsite Worker Interview
Documentation
Worker Interview Template Internal SEA Auditors Offsite Worker Interview
Documentation

10 Appendix 1 – Audit Process Documentation

ZERO TOLERANCE & THRESHOLD EXTERNAL MONITOR ALERT

CAP TEMPLATE
ISSUES SHEET
OPENVIEW SERVICE PROVIDER AMERICAS EXTERNAL MONITOR
CHEMICAL INVENTORY LIST
PROCESS FLOW GUIDANCE