A compliance audit is a comprehensive review of an organization’s adherence to regulatory guidelines. Independent accounting, security or IT consultants evaluate the strength and thoroughness of compliance preparations. Auditors review security policies, user access controls and risk management procedures over the course of a compliance audit.
WHAT HAPPENS DURING COMPLIANCE AUDIT:
- Internal Management: Compliance audits usually start with an interview of company management. Business owners, directors and operational managers are included in this process. Auditors use these interviews to determine how well each individual owner or manager understands the terms of their contractual agreement.
- Employee Performance: Employee performance is also subject to compliance audits. Auditors may interview employees to determine how well they understand their responsibility to the company’s contractual agreement. The employee interview process is usually done without a manager present. This allows auditors to receive truthful employee answers that are not influenced by the presence of a superior.
- Process Review: Auditors will review the company’s individual business processes to determine whether or not they are in compliance with contractual agreements. Auditors typically measure how well the company completes functions and if any compliance violations are present in the system.
- Final Analysis: Company management and auditors usually have a final wrap-up meeting once the compliance audit is finished. This meeting allows company managers to review the auditor’s report prior to the public release of this information. Auditors will also provide the company with specific suggestions on correcting violations or other process errors.
OBJECTIVES OF COMPLIANCE AUDIT:
- Effectiveness Assessment: The main objective of conducting an internal or external compliance audit is to assess the overall effectiveness of a business’s compliance practices and protocols.
- Deficiency Identification: A compliance audit also uncovers intentional or unintentional weaknesses or deficiencies in a compliance program.
- Ongoing Verification: Compliance programs found to be lacking may be assigned corrective actions to correct the deficiency or deficiencies. When this happens, verification becomes an objective in a follow-up audit or the next annual compliance audit.
- Program Improvement Recommendations: A final audit report presented to the business owner reveals an additional objective of a compliance audit. In addition to a written effectiveness assessment, a final report often includes suggestions and recommendations for how the business owner can improve the program.
BENEFITS OF COMPLIANCE AUDIT:
- Through Compliance Audit, the management will quickly identify the issues of the company that needs to be addressed. Instead of spending time on Bench-marking, compliance audit plus self-assessments is better in solving the concerns of the company.
- Having a compliance audit program performed each year will enable the management to identify and manage program priorities, learn potential weakness and develop a consistent process.
- Another benefit is those relevant findings can be addressed immediately. Compliance reviews can be focused on specific geographic operations or functions such as the third party due diligence and contracting.
- Compliance program audits also provide important metrics that can be used as a basis to report it to the company’s management. The management can also learn valuable information by comparing audit data from one year to another. This information, in turn, provides relevant data for assessing the compliance program.
- With a compliance audit, the company will produce more effective strategies to improve their company.
RESPONSIBILITY OF COMPLIANCE AUDITOR:
A Compliance Auditor is responsible for ensuring that a company is adhering to any federal and state regulations relevant to its business. They also review and enforce compliance with standards or regulations imposed by professional organizations or even a company’s internal guidelines. They might conduct audits in areas of accounting, finance, information technology or security.
They will generally work closely with upper management or administrative personnel, such as Chief Information Officers or Chief Financial Officers, in reviewing compliance procedures and processes. Many compliance auditors act as consultants, though some may work within a company’s own compliance department. Demand for Compliance Auditors, as per the BLS, will increase 11 percent through 2024, creating 142,400 openings during that period.
DUTIES OF COMPLIANCE AUDITOR:
- Oversee and Conduct Audits: A Compliance Auditor will manage both external and internal audits as necessary. This will include reviewing records, reports, software and any other relevant programs and activities affected by regulations. Following an audit, Compliance Auditors will then make recommended changes to procedures or practices that are not in compliance with stated regulations and help to implement a plan to address such changes.
- Identify Risks: Being proactive is important for Compliance Auditors. As part of their responsibilities, Compliance Auditors will analyze potential risks within specific areas of a company in order to avoid compliance issues.
- Maintain Compliance Records: Keeping track of any violations reported against a company and responses and plans regarding these violations are the duties of a Compliance Auditor.
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