Audits, HR

Scope

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

Regulatory citations

• None

Key definitions

• Audit: A systematic, objective tool to assess regulatory or policy compliance in the workplace. 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.
  • Identify any unwritten practices that should be formalized or changed.

Summary of requirements

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

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

Benefits of HR audits. There are numerous benefits to an audit if it is properly conducted and acted upon:

• Reducing liability. First, an audit can help to identify and correct regulatory non-compliance problems, which can help reduce liability.
• Educational tool. A second benefit of an audit is that it can serve as an educational tool. It can increase employee awareness and understanding of human resources, and the audit process can also be an opportunity to demonstrate your company’s commitment to compliance and employee relations.
• Efficiency and cost-effectiveness. Third, audits can potentially identify ways to improve the efficiency and cost-effectiveness of an HR system.
• Good-faith effort. Finally, workplace audits may be viewed favorably by regulatory agencies and in legal proceedings. A thoroughly completed audit with proper follow-up can signal that your company is making a good-faith effort to comply with applicable regulatory requirements and good practices.

Potential drawbacks to HR audits. Although audits provide definite benefits, there are some potential negatives as well. Before conducting an audit, be aware of the following points:

• Unknown problems. An audit may uncover previously unknown problems, and the solution may not always be simple. If a violation of a regulation or law is discovered, what will be done?
• Corrective actions. Failure to correct problems identified in an audit can potentially lead to many more problems. Implementing corrective actions in a timely manner is an important part of conducting an audit. If problems are identified in an audit and nothing is done to correct the situation, this information may be used against your company in future enforcement proceedings.

Making audits work for you. Of course, the benefits of HR audits outweigh the negatives, and in no way should the previously listed drawbacks discourage you from performing them. Some important points to keep in mind to help make safety audits a consistent benefit to your company include the following:

• Scope. Before you begin an audit, it’s important to determine the scope of the audit. A particular company many only want to examine its recruiting practices to ensure compliance with Equal Opportunity Employment laws. On the other hand, another employer may want to audit all of its human resources policies, procedures, and systems.
  • Determining the scope will help you set realistic timetables to complete the audit.

• Laws. Once the scope of the audit is set, the next step is determining what federal, state, or local laws apply to the audit area. This can be a lengthy and tricky process. A good starting point is identifying those laws that are dependent upon size of the employer for coverage (i.e., FMLA) and laws that apply because of the nature of the employer’s business or industry (i.e., Drug-Free Workplace Act).
  • Areas that are common to most business operations and that are good candidates for auditing include:
    • Employee handbooks
    • Equal Employment Opportunities
    • Discrimination
    • Affirmative Action
    • Recruiting
    • Hiring/firing
    • Pay
    • Leaves
    • Benefits
    • Discipline
    • Drug testing
    • Privacy
    • Background checks