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How is compliance to rules checked in Ship management office?


Have you ever wondered what are the quality checks in a ship management office? How are they regulated, like ships-who makes rules for the offices on the processes and procedures? This blog will cover answers to these questions and one will be able to know the checks and balances in a shore office.

Like ships are required to undergo many Audits and inspections, the office is also required to undergo various audits and inspections to ensure their compliance to various regulations and requirements.

These audits and inspections ensure that the office is equipped and certified for operating the vessels which are managed from that office.


Let’s quickly learn the difference between Audits and inspections:

Audits are usually more to do about the documentation of the processes followed, record keeping and certification whereas inspection is to check the processes and procedures in action to explain with an example from the ship: Audit can be check if the ropes onboard are certified and inspection would be to physically check the ropes for their condition and fit for use. I have covered this earlier in the “ship inspections” video which you can watch after this, as well.

Now coming to our today’s topic, there are basically three types of audits based on who is conducting the audit or inspection.


These are, the first party audit, a second party audit and a third-party audit. It’s basically in the same lines as 1st person,2nd person and 3rd person perspective in English. First person is I, me, etc. 2nd person in you and 3rd person is they.


So, first party Audits are basically company doing its own audit, so that’s basically the internal audits and inspections. So, all the internal audits and inspections or called first party audits.

Second party is one who is in a direct business relation to the 1st party.


So, in the company’s case, the second party would obviously be the owners assuming the 1st party is a ship management company. The second party audit will basically be the shipowners audit and inspection.

Now we come to the last and the most important type of audits which are the third-party inspections and audits. Third party audits are done by person or entity who are not related to the company in business and are auditing them against set of rules.


Third party audits and inspections are many and are also important.


1st is the DOC and MLC audit.: For any ship management company, this is the bread and butter. DOC is basically the document of compliance and MLC, is the Maritime Labour convention compliance. The document of compliance is issued as per the ISM code. The Doc is Issued for a specific flag state for a ship type. For example, if the company has a Panama flagged bulk carrier, then the company will have a DOC from Panama for a bulk carrier and if company has another Liberian flag bulk carrier, the company cannot use the Panama DOC and the company has to get another DOC from the Liberia for bulk carrier. Another case is if the company takes over a Panama Tanker, then Panama can issue me a DOC for both Bulk carrier and tanker and the DOC will mention both the vessel types.

The Audit process for DOC is as follows:

The first audit is the interim audit is when the company doesn’t have any DOC and the company is for E.g., planning to take over a Panama flagged vessel for technical management. In which case the company will approach the Panama flag. Panama flag then appoints a class surveyor to perform what is called an Interim DOC audit. The scope of the interim audit would be to check the manuals and process developed by the company to manage the vessel once it has been taken over. So based on the audit the class issues an interim DOC on behalf of the flag. This interim DOC is usually valid for 3 to 6 months withing which the company is to complete the initial audit.


The initial audit is done after the vessel has been taken over and the vessel has operated some time on the Safety management system to generate records. These records are checked in the Initial audit to check if the SMS system is properly implemented on the vessel. The SMS system would have forms, checklist, procedures, and records of the implementation. Once the Initial audit is completed the company is issued a full-term DOC valid for 5 years.


The initial audits are also conducted by the class on behalf of the flag. The classification societies are called recognised organisations. Self-have made a video on classification societies which would give you a good idea on the role of classification societies. In case the company does not get the initial audit done within the expiry of the Interim audit for any reason, the interim DOC stands cancelled and the company will need to do the Interim audit again if required.


Once the full-term DOC is issued there would be a regular check if the ISM code and the SMS system is effective implemented. This check is called annual verification which is conducted every year. The full-term DOC has a place where the auditor can affix his signature after the annual verification. The scope of the audit is usually verification of the SMS, the processes and the related record keeping for the preceding year.


During the 5th year, the audit changes to the renewal audit. The scope of the renewal audit similar to the annual audit however the verification would be for the last 5 years data in contrast to the annual audits where only the last 1-year data is verified. Once the audit is completed the DOC is renewed for 5 years.


All the Audits to be completed in plus or minus 3 months window from the anniversary date of the issuance of the DOC except for the renewal where in it is preferred to be in the minus 3 months window


The MLC certification also follows the ISM system and renews every 5 years, this audit is also done along with the DOC audits every year.


Next is the ISO audit: The ISO certification is very common these days and provide quality assurance to the clients of the ship manager. It is not a statutory requirement like the DOC however it is an industry wide accepted symbol of quality if the organization is ISO certified. ISO certification also follows a similar flow of the DOC certification.


Next is the TMSA which is Tanker Manager self-assessment where, as the name suggests, it is applicable for Ship managers who manage tankers. The TMSA even though not a statutory requirement, is required by oil majors where an oil major representative visits the office for conducting the audit. There is no fixed schedule however the manager has to declare at what stage the manager is in. There 4 stages in 13 elements and on an average, stage 3 is considered satisfactory/good.


Finance audit is the next-where in even though it is not directly affecting the office coordination communication with regards to seafarers, it is still an important part of the office operations. Finance audit usually starts after the end of financial year and continues for couple of months. There are both internal and 3rd party audits as per statutory requirements.


Next, we come to the RPSL audit which is recruitment and placement service license. If the company is also recruiting seafarers, then this becomes a statutory requirement where the company would need to present itself for the audit if they want to recruit seafarers . The process of issuance and audits again follows the annual cycle and the renewal except there in no interim RPSL provided.


The Last audit/inspection in the 3rd party audit is the office safety/fire audits. These audits are carried out at regular intervals by the local fire department or dedicated organizations having the license for the same depending on the country/location. These audits are usually coordinated by the admin department of the office.


That completes today’s topic of audits and inspection in office and we will see you in the next one!


Thank you so much for reading the blog till here and I’m sure you have gained knowledge on the topic discussed. I try to make the topic simple so that it can be understood easily.


To watch the video on the same subject: https://www.maritimeplatform.com/v/236


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