Common Audit Findings in Manufacturing and How Engineering Teams Can Prevent Them

Manufacturing audit failures are rarely caused by broken systems. In most cases, they highlight something much more practical: gaps in engineering capability.

Across UK manufacturing, common findings in ISO 9001, IATF 16949 and supplier audits often link back to the same issue. Teams are stretched. Roles are unfilled. Contractors are brought in quickly. Documentation and compliance fall behind. Missing training records, incomplete change control, supplier gaps and IR35 exposure are usually not isolated mistakes. They are signs that engineering teams are under pressure and workforce planning has not kept pace with demand. As compliance expectations increase and HMRC scrutiny continues, audit outcomes are increasingly tied to how well engineering teams are structured, supported and resourced.

The Most Common Audit Findings in Manufacturing Environments

1. Incomplete or Inconsistent Documentation

This is the most frequently cited finding across quality, environmental, and process audits. Standard operating procedures aren't updated when processes change, work instructions are missing sign-off, or training records are incomplete. In most cases, the root cause is a lack of dedicated resource to own and maintain documentation, often because the engineering or quality team is understaffed or experiencing high turnover in key roles.

2. Training Records That Don't Match Operational Reality

Auditors consistently find discrepancies between who is recorded as competent to perform a task and who is actually performing it on the shop floor. This is particularly common in environments with high contractor usage or where engineering headcount has grown rapidly. Temporary workers or contract engineers brought in at short notice often lack the formal training documentation required, even when they are functionally competent. Without a managed onboarding process, this becomes a recurring finding.

3. Process Non-Conformances Linked to Skills Shortages

Where engineering teams are short-staffed, corners get cut. Critical process steps are missed, checks are deferred, and preventative maintenance slips. Auditors will identify these as process non-conformances, but the underlying cause is workforce capacity. Finance teams often see this reflected in rising scrap rates, rework costs, or warranty claims in the period before a failed audit.

4. Supplier and Sub-Contractor Compliance Failures

Procurement teams carry particular exposure here. Audits frequently surface gaps in how suppliers and subcontractors have been onboarded, assessed, and monitored, missing certificates of conformance, inadequate supplier qualification records, and a lack of documented approved supplier lists. Where procurement teams are under-resourced or where supplier management has been distributed informally across engineering functions, this becomes a significant risk area.

5. IR35 and Contractor Compliance Gaps

For finance teams, this is one of the most financially consequential audit findings. Manufacturing organisations that rely heavily on contract engineering resource, particularly during rapid growth or project-based hiring, frequently find themselves exposed to IR35 misclassification risks. HMRC compliance audits and internal financial audits alike have increasingly flagged the use of contractors without adequate status determination, documentation, or oversight. The liability can be substantial, and the reputational impact of non-compliance compounds the financial risk.

6. Change Control Failures

Engineering changes implemented without following formal change control processes are a consistent finding in both quality and operational audits. This is directly linked to team structure. When experienced engineers leave and are replaced slowly or not at all, institutional knowledge walks out the door with them, and informal workarounds take hold. A well-resourced, stable engineering team is the single most effective prevention mechanism for change control failures.

How Engineering Teams Can Prevent These Findings

Establish Stable Core Engineering Capability

• Maintain a stable core of permanent engineering and quality staff.
• Supplement with contract resources during peak periods.
• Avoid heavy reliance on reactive agency hiring.
• Stability supports institutional memory and process discipline.
• Organisations with stable teams consistently perform better in audits.

Build Rigorous Onboarding into Every Hire

• Ensure complete training records, competency sign-offs, and induction documentation before independent work.
• Implement a structured onboarding process that doesn't depend on overstretched team leaders.
• Recognise onboarding as a resourcing challenge during volume hiring (e.g., new sites, ramp-ups, project expansion.
• Ensure onboarding processes scale effectively with hiring demand.

Address IR35 Compliance Proactively

• Treat IR35 compliance as an ongoing finance requirement, not just an audit response.
• Ensure every contractor has a documented Status Determination Statement (SDS).
• Have SDS reviewed by someone with appropriate authority and expertise.
• Recognise the administrative burden of managing contractor compliance at scale.
• Consider structured Recruitment Outsourcing (RPO) models to improve compliance oversight and reduce risk.

Ensure Supplier Management Is Clearly Owned and Resourced

• Clearly define ownership of supplier qualification and monitoring.
• Avoid informal or fragmented responsibility across engineering functions.
• Ensure documentation and compliance processes are consistently maintained.
• Assign a competent and consistently available individual to manage supplier compliance.
• Clear ownership significantly reduces audit risk.

Where Recruitment Outsourcing Changes the Picture

Owen Daniels provides a structural solution to reducing audit risk by centralising engineering workforce management and embedding compliance from day one. Instead of fragmented agency oversight and disconnected contractor records, Owen Daniels delivers end-to-end visibility, control, and accountability across your engineering talent pipeline.

Key Benefits of Recruitment Outsourcing

Consolidated workforce visibility
Owen Daniels creates a single, auditable view of all contractors and permanent engineering staff. Compliance status, certifications, right-to-work documentation, and training records are centrally tracked and maintained. This removes the documentation gaps and inconsistencies that auditors frequently identify.

Built-in IR35 and contractor compliance 
IR35 compliance is managed as a core part of the Owen Daniels service. Every contractor engagement is supported by proper Status Determination Statements and structured compliance oversight. This ensures finance and procurement teams remain fully compliant while reducing administrative burden and overall risk exposure.

More stable engineering teams
With deep expertise in engineering and manufacturing recruitment, Owen Daniels delivers candidates who are technically aligned and culturally suited for long-term success. This improves retention, reduces costly turnover, and preserves critical institutional knowledge. Greater workforce stability directly reduces the audit risks associated with constant role churn.

Predictable spend and clearer budget control
Owen Daniels consolidates recruitment into a transparent and predictable cost structure. Finance teams benefit from simplified invoicing, clearer reporting, and improved workforce cost forecasting. This enables organisations to reduce recruitment spend while strengthening compliance and maintaining the engineering capability required for sustained operational performance.

Owen Daniels Recruitment Outsourcing clients in engineering and manufacturing typically achieve:

• 30–50% reduction in total recruitment spend
• 32-day average time to hire — 12.22% faster than the UK engineering and manufacturing sector average
• 100% IR35 compliance across contractor populations
• Up to £750 saving per vacancy on advertising costs alone
• Measurable improvement in 12-month retention versus multi-agency models

Owen Daniels specialises in Recruitment Outsourcing for engineering and manufacturing organisations. We work with finance and procurement teams to build stable, compliant engineering workforces that hold up under scrutiny and deliver measurable cost savings in the process.