A compliance audit checks the adherence to legal requirements or other guidelines in a private company or a public institution. Sanctions or fines due to violations of the requirements can be avoided with an audit.
What is a compliance audit?
A compliance audit is a comprehensive examination of whether the guidelines or legal requirements applicable to a private company or public institution are being met. The audit is usually carried out by independent auditors. The subjects of the audit are, for example, access controls, risk management processes, security regulations, data protection, or the securing and storage of data.
The content and focus of the audit vary depending on the area in which the organization or company operates. The type of data that is processed or stored also influences the conduct and content of the audit. Data can be confidential financial data, personal health data, or communications content and metadata. In finance, compliance requires extensive data security obligations. In healthcare, the goal is to protect patient’s private data and health information from unauthorized access.
Explanation of the term compliance
To understand the purpose of a compliance audit, it is first necessary to explain the term compliance in more detail. Translated, compliance means adherence to rules. However, this adherence to rules is not defined in more detail and can refer both to legal requirements and to guidelines defined internally in a company. These guidelines can even include ethical behavioral requirements, values, and principles in business dealings or social responsibility.
In the financial environment, compliance is understood to mean the observance of rules to avoid financial crime and corruption. Other requirements to be met by compliance are voluntary commitments or contractual rules. In a company, compliance has a company-wide impact and influences all processes and hierarchical levels. If there is no compliance, this can not only result in legal violations but also have an impact on the image and business success.
Under certain circumstances, sanctions such as fines or penalties are imposed for legal violations. Compliance violations also often result in personnel consequences at the management level, up to and including personal liability cases.
Procedure of a compliance audit
The process of a compliance audit can vary greatly depending on the type of company or organization and the content to be audited. As a rule, auditors work through a catalog of questions during the audit. The specific questions can be asked of top management, the various management levels, but also of IT managers or employees. If the audit focuses on IT systems, typical questions related to user access rights, the management of user rights, the securing of data, or the documentation of IT systems.
If the organization uses special GRC software (Governance, Risk Management, and Compliance), many of the auditors’ questions can be answered directly via the GRC software. During the audit, risk areas and risk types can be identified and optimization potential can be identified.
Example of a compliance audit
For a better understanding of the compliance audit, here is an example of an audit from the area of occupational health and safety. The auditor checks how well a company implements the legal requirements in this area. Thanks to the compliance audit, a comprehensive snapshot is created that covers all aspects relevant to operational safety in a company.
The risk of workplace accidents and liability risks for the company can be minimized. As part of the compliance audit, the auditors conduct interviews with the previously designated contacts in the company. The questions examine and assess compliance with the minimum legal requirements for operational safety in various areas.
Among other things, points such as organizational structure and responsibilities, health protection, fire protection, environmental protection, the German Ordinance on Industrial Safety and Health (BetrSichV), or cooperation with external companies and service providers are taken into account.