The Category Error

Evals measure Quality.
Audit proves Compliance.

They are not different approaches to the same problem. They are solutions to different problems. Conflating them is a regulatory risk.

01. The Universal Pattern

It Has Always Existed

The path to reliability is not a new concept invented for AI. It is a universal law of industrial process — whether in manufacturing, finance, or healthcare.

The triumvirate remains: Observability (seeing it), Testing (verifying it), and Audit (proving it). Most teams stop at step two.

Step 01

Observability

“What happened?”

Analog: Datadog / Splunk
Step 02

Evaluation

“Did it work correctly?”

Analog: Unit Tests / QA
Target State
Step 03

Audit

“Can you prove it to regulators?”

Analog: SOX / HIPAA / JCAHO

What Changed: AI in the Middle

Traditional software is deterministic: same input always equals same output. AI systems are probabilistic: the same input can produce different outputs every time. This breaks traditional testing.

Interactive: Non-Deterministic Simulation
User PromptInput A
Request
LLM ModelBlack Box
Response
Waiting...

Control Panel

Click multiple times to observe how the same input produces different outputs. This is the core “Probabilistic Problem”.

SYSTEM LOG // MONITORING
System ready. Awaiting input...

The Complexity Gradient

Why “Unit Tests” stopped working for AI.

Deterministic Subjective
Interactive: The Complexity Explorer
Deterministic (Math)Subjective (Vibes)

Task Type

Extraction & Formatting

Recommended Approach

Hybrid (Rules + weak Eval)

Example Prompt

Extract the invoice number and total amount from this text.

Verification Truth Source

Schema Validation + String Matching
The Current State

The Sampling Trap

In a call center with 250,000 interactions, a team of 20 nurses can only review about 3-5% of cases.

This “sampling approach” relies on the dangerous assumption that the 3% you see represents the 97% you don't.

LLM-as-Judge promised to fix this by reviewing 100%. And for quality monitoring (trends), it works. But for Compliance, it fails because it cannot guarantee the same result twice.

Figure 3.0: The Coverage Gap
Visualizing 250,000 Annual Interactions
Visibility
3%
⚠️ 97% BLIND SPOT
You are reviewing ~10k cases. 240k interactions go unchecked. Systematic errors spread undetected.
Interactive: Scale & Cost Projection

Input Parameters

Projection Analysis

TRADITIONAL
COVERAGE
5%
12,500 reviews
COST
$208,333
~$16.67 / review
LLM-AS-JUDGE
COVERAGE
100%
250,000 reviews
COST
$2,500
$0.01 / review

The Evaluation Methods Landscape

Not all evaluation methods are created equal. Each has distinct trade-offs across coverage, consistency, nuance, cost, and auditability.

Interactive: Method Profile Analysis
CoverageConsistencyNuanceCost Eff.Auditability
Human Expert Review
3-5% Coverage
Select a method to analyze profile:

Human Expert Review

The gold standard. Contextual, credible, but expensive.

Rule-Based

Fast and deterministic. Good for format, terrible for nuance.

Statistical

Pattern detection. "This call was 3x longer than average."

Reference Comparison

Comparing output to a Golden Dataset. Expensive to maintain.

LLM-as-Judge

Scalable judgment. Handles nuance but lacks audit trails.

The Categorical Separation

They Solve Different Problems

Evals and Audits are not competing approaches to quality. They operate on different axes entirely. Conflating them creates a compliance gap that no amount of prompt engineering can close.

Category

Evals

Quality Assessment

Audit

Regulatory Proof
Primary Goal
“How good is this output?”
“Does this provably follow Regulation X?”
Valid Methods
LLM-as-Judge, Statistical Analysis, Reference Comparison
Rule-based Verification, Deterministic Traversal
Acceptable Variance
Yes (85 vs 82 score is fine for trends)
NO (Must be deterministic)
Artifact
Scores, Ratings, Dashboards
Evidence Trail linked to Source Policy