Why perform a compliance audit?

Why companies need to perform a compliance audit.

We had written an article awhile back on compliance auditing and the advantages of doing so. I’d like to discuss that today in this article.

As we know, from the previous article, that a compliance audit is defined as “Audit undertaken to confirm whether a firm is following the terms of agreement… or the rules and regulations applicable to an activity or practice prescribed by an external agency or authority.”

What does this mean?

Well, every industry has standards to adhere to. Especially industries where the public is owed a higher duty of care. The greater the duty of care, the greater the compliance regulation. Casinos, Liquor Stores, Maintenance Services and Facilities, Banks, Hospitals etc.

I sure you can see the trend of industries by now. Each industry needs to adhere to regulations to ensure fairness and care of the customer/ shopper/ consumer. This also means that, each industry had a specific way of reporting and handling issues.

The question is, are these being handled in the most effective way following the regulations. If a company is found not to follow the compliance regulations, that would spell legal consequences.

Compliance Auditing

How to perform a Compliance Audit?

Some companies may have internal staff that specialize in auditing and making sure everything is within the compliance regulations. While other may hire third-party auditors.

These third-party auditors are not necessarily specialist, which has the advantage of giving the company a different point of view to assess compliance.  They will be trained and briefed on what to look out for. This is then reported back to a third-party company to asses the evaluation before being given to the parent company.

This is exactly the reason why, when it comes to industries that have strict compliance regulations, it is important to have someone knowledgeable. In contrast to hiring a person that is simply briefed. These auditors are specialist in their field and have a keen sense of what to look out for.

So, depending on the industry and the how strict the regulations are. A company would need to decide on how to best perform these audits. In some instances, having both internal and external auditors perform similar scenarios would help give a bigger picture as well.

Failure to Comply

Just as a side note and as previously mentioned. Failure to comply to industry standard and regulars, a breach of duty of care or a situation that can cause possible harm. Will lead to legal action being taken by authorities.

This would of course, cause a company to incur cost, penalties, and lost time that would otherwise be useful elsewhere.

It’s never easy, although, the whole point is ensuring fairness and competitiveness. And that companies are being responsible to themselves, their employees and their customers.

Need a hand in determining if your company needs an audit? Contact us now.