• HR audits help a company ensure it complies with various applicable employment laws.
• Beyond employment laws, HR audits can help a company uncover opportunities for improvement

A human resources (HR) audit is a systematic, objective tool to assess regulatory or policy compliance in the workplace. HR audits may be done in-house as self-audits, or by an outside third party. Depending upon the company, one method may work better than another. If the company is large enough, there may be opportunity for one area of the HR department to audit another. However, the employees of one area may not have the expertise to provide an effective audit of another area.

Example: The HR department is broken down into departments such as employee benefits and labor relations. The representatives in the employee benefits are available to audit the practices of the labor relations department; however, a company is not sure the departments are well versed in the routines and requirements, and therefore may not produce a very effective audit.

External audits

Some companies have a network of other companies through which there are opportunities to audit each other. This method is usually cost-free and allows HR departments to retain control of the process. This method also allows for one company’s specific area, such as payroll, to audit another company’s payroll practices. Another benefit is that the companies in the network should be familiar not only with the federal requirements, but also the applicable state and local requirements.

External audits, whether done by a third party or through a network of other companies, may provide a fresh perspective that a self-audit may not reveal.

An audit usually involves a survey of the workplace to:

• Identify what laws or regulations apply to a company or facility,
• Determine whether applicable regulations are being complied with,
• Determine whether company policies and procedures are being followed,
• Assess documentation practices, and
• Identify any unwritten practices that should be formalized or changed.

Audits may be voluntary, or may be required. In a voluntary audit, an employer decides that it would be advantageous to conduct an audit, whether to evaluate compliance status, or to identify any suspected problems.

Audits can be mandatory if part of the settlement of an enforcement action between a governmental agency and a company. Audits may also be mandatory if required by a regulation. For example, some Occupational Safety and Health Administration (OSHA) regulations, such as those governing process safety management, have self-audit requirements.