What it means
A quality assurance evaluation begins with a clear standard, such as a policy, procedure or accuracy target. A reviewer then takes a sample of completed work and compares each item with that standard.
The findings are recorded, errors are classified, and corrective actions are agreed. The approach is used across finance teams.
Accounts payable might check that invoices were coded to the right accounts and approved by the right person, while the payroll team might check that pay changes were authorised. Customer-facing teams may review calls or emails to confirm accuracy and compliance.
Sampling is central. It is rarely practical to review every item, so the reviewer selects a sample large enough to give a fair picture, sometimes random and sometimes aimed at higher-risk items.
The error rate in the sample is then used to estimate the quality of the whole population of work. An evaluation is different from an audit, although the two are related.
An audit is usually independent and looks at controls and financial statements at a point in time, while quality assurance is ongoing and aimed at improving day-to-day performance. Results should feed into training, procedure changes and sometimes system fixes.
Good evaluations are fair and constructive. Reviewers should apply the same criteria to everyone, explain their findings and focus on fixing the process rather than blaming individuals.
Tracking results over time shows whether quality is improving, and a simple chart of the monthly error rate is often enough to show the trend. Because the letters QAE can mean different things in different organisations, it is wise to confirm the meaning in the document or team where it appears.
In this context it refers to a quality review of work against defined standards.
In practice
Real-world examples.
Example
An accounts payable manager samples 150 processed invoices each month. She finds 9 coded to the wrong expense category, an error rate of 6%. The team receives training on the chart of accounts, and the next month's rate falls to 2%.
Example
A bank's customer service team has its calls reviewed against a checklist covering accuracy of information and use of required disclosures. The findings show that a few staff are skipping a required statement. The bank adds the statement to the call script.
Example
A manufacturing finance team evaluates its month end close checklist and finds that three reconciliations were signed off without review. The controller reassigns the reviews and adds a reminder to the close calendar.
Formula
Calculation
Error rate = items with errors / items reviewed x 100; accuracy rate = 100% - error rate
Suppose a finance team reviews a sample of 200 supplier invoices processed in a month. The reviewer finds 6 invoices with errors, such as the wrong account code or a missing approval. The error rate is 6 / 200 = 3%, and the accuracy rate is 100% - 3% = 97%. If the team's target is 98%, the result is 1 percentage point short and corrective action is needed.Case study
Seen in the real world.
Pinecrest Retail is an illustrative, fictional company whose accounts payable team processed about 4,000 invoices a month. Suppliers began to complain about late and incorrect payments, but no one knew how often mistakes happened.
The finance manager introduced a monthly quality assurance evaluation, sampling 200 invoices and recording each error type. In the first month the error rate was 7.5%, with most errors from duplicated invoices and missing approvals. After a new duplicate check was added and staff were retrained, the rate fell to 2% in four months, and the illustrative supplier complaints almost disappeared.
The finance manager now shares the results with the whole team each month, including the best-performing processes. The illustrative team treats the evaluation as a tool for learning rather than a test, and new staff use the error log as part of their induction.
Watch out
Common mistakes.
- Reviewing too small a sample, so the results do not reflect the true quality of the work.
- Using an evaluation to blame individuals, which discourages honest reporting of errors.
- Recording findings but never acting on them, so the same errors keep recurring.
Questions
People also ask.
What does QAE stand for?
It commonly stands for quality assurance evaluation, but the letters can have other meanings in some organisations, so check the context.
How is a quality evaluation different from an audit?
A quality evaluation is an ongoing internal review to improve performance, whereas an audit is a more formal and often independent examination at a point in time.
How large should the sample be?
It depends on the volume of work and the level of risk, and higher-risk processes call for larger samples.
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