Conducting Human Resource Compliance Audit
Evaluate Your Practices and Policies with an Independent Review
There are different types of HR Audits. Some companies conduct an internal audit, a compliance audit that focuses on relevant regulatory requirements, and a processes and practices audit.
External expertise is crucial to the success of the audit. HR auditors are well-versed on compliance requirements, risks and current best practices. Obtaining the results of your HR audit will give you factual information about where you are and where you could be. The company can then transform information into action, creating specific action plans and designing longer-term plans for continuous improvement.
For some employers, there might be a “Risk Mitigation” Audit performed. This usually is triggered by a specific compliance violation or another major problem related to the violation of an HR rule or principle. This type of audit is designed to ensure that existing policies and procedures are effective and are being followed.
These are the types of audit services that can be performed:
- Compliance Audit – covers federal and state regulations that impact recordkeeping, reporting and HR program administration.
- I-9 Audit – reviews active I-9 forms, terminated I-9 forms or both
- HR Program or function audits – covers a review of any individual HR-related functional area (i.e. recruitment function)
- Full HR Audit – covers a review and evaluation of areas noted above as well as an audit of all other HR functional areas, including staffing and recruitment, job analysis and job descriptions, compensation and benefits programs, performance management, training and development, employee relations and policies and HR metrics.
With a small or single-person HR department it isn’t easy to stay abreast of ever-changing regulatory compliance and human resources best practices. Audits bring HR expertise into the picture and can jump-start needed discussions and process changes for small companies. Larger companies may opt for a more comprehensive audit initially before refining subsequent audits to focus on more specific areas.
Payroll frequently represents a major component of HR audits because it represents the single largest expense in many organizations. One would be amazed at how many times we find issues with people inappropriately taking money through payroll.
The specific steps of an HR audit are set forth by the Society for Human Resource Management:
- Determine the scope and type of audit
- Develop the audit questionnaire
- Collect the data
- Benchmark the findings
- Provide feedback about the results
- Create action plans
- Foster a climate of continuous improvement.
By knowing what to expect and being open to change, an HR compliance audit can assist any size organization become better prepared to deal with the ever-changing laws and best practices that might come their way each year.