Compliance Auditing: Types, Regulations, and Processes


In any type of business, there are always a certain set of rules that need to be followed. These rules are often essential for maintaining the safety and legality of a business’ functions, products, and services. For example, HACCP principles that are used in food businesses ensure the safety of food throughout the production process.

That being said, ensuring these rules are followed properly is not an easy task. In such cases, many organizations perform compliance audits that can verify the adherence to set criteria and guidelines.

What Is a Compliance Audit?

A compliance audit is an independent review of a company’s adherence to various legal, regulatory, safety, and other guidelines. These types of audits primarily focus on the effectiveness of an organization’s internal processes and how well they are in line with legal regulations.

There are no set guidelines for compliance audits and they can vary based on various factors. For example, internal departments may be audited by internal parties while large organizations may opt for external audits. Due to this, there are multiple types of compliance audits that adhere to different standards for compliance.

Types Of Compliance Audits

Some of the most common standards followed for compliance audits are:

  • Payroll

A payroll compliance audit is done to ensure that a business is adhering to collective bargaining agreements. These are negotiations that have been set in place to regulate the terms of employment in a particular organization or workplace.

  • Human Resources (HR)

Human Resources compliance audits consist of many other sub-types depending on specific local laws and regulations. That being said, they primarily verify that a firm is maintaining proper employee documentation and complying with local employment laws.

  • ISO 14001

International Organization for Standards (ISO) is the organization responsible for developing International Standards for multiple businesses and processes. One such standard is the ISO 14001 which sets specific guidelines for a firm’s environmental management system to minimize the negative impact of their operations.

ISO 14001 compliance audits are essential to limit the negative impact that a business’ operations have on the environment. To remain ISO 14001 certified, a business has to complete an initial audit as well as regular maintenance audits.

  • Internal Revenue Services

The IRS is the revenue service for the US government and is responsible for the collection of taxes. They perform audits, which are referred to as examinations, in which a company’s payment of income taxes is verified to ensure that they are following the tax code.

Also Read: Why Do You Need Quality Management System ISO 9001 Certification in 2022?

Compliance Audit Procedures

Most compliance audits involve the recording and verification of various factors to ensure that they are following set criteria. Due to this, compliance audit procedures are often quite complex and consist of various steps that can efficiently cover all relevant aspects. 

The primary steps in most compliance audit procedures are:

1. Contact the Auditor

Before conducting a compliance audit, the organization will contact auditors. This is done to make sure that the selected auditor has the required skillset and experience to perform the audit. In some cases, this will involve contacting accredited auditing firms who will then assign various auditing teams based on requirements.

2. Details of the Proposal

Following this, the auditor will send a proposal with basic details to the company or organization that is to be audited.

3. Acceptance

Once the proposal is accepted, the auditor will convey the guidelines and procedure of the audit to the company. Along with this, they may also send preparation measures such as a checklist that can be used by a firm to equip for the audit. This is dependent on each specific case as auditors may also withhold specific details.

4. The Audit

The audit is then conducted either in person or in any form of communication that is feasible for both the auditor and the company. This step involves the recording and verification of the company’s adherence to the set criteria. Thus, depending on the type of compliance audit, it can range from the interview of employees to the verification of financial records.

5. The Report 

Finally, once the audit has been completed, the auditor will prepare a report and send it to the company. Depending on the type of audit, this could be a simple approval or passing of the audit, while some audits warrant detailed reports that involve recommendations and reasoning. 

In case a company does not pass a compliance audit, they will often be given a remedial time that they can use to resolve the issues. Post this, a follow-up audit is performed to confirm that the issues have been fixed.

Also Read: Why Good Manufacturing Practices are Vital in the Food Industry

After going through this, the importance of compliance audits is prominent. However, for many firms, especially in their early stages, adhering to various guidelines can be quite difficult. Thankfully, we at Pulse can help make sure your business is following all required criteria properly.With our advanced AI inspection and auditing tool, managing countless factors within your business becomes much more simple. So, you can confirm that your firm follows the required criteria to be prepared for the next compliance audit. Just click here to book a demo or send us an email, and we can help your firm with compliance audits!