Compliance may not be on the minds of many business owners, as they focus on helping customers and clients and on growing the company. But what happens to your company's reputation when a compliance problem goes public?
There are a few different types of compliance audits including financial, operational, environmental, and industry-specific audits. Use the information below to review your business to ensure you are in compliance.
These audits focus on a company's financial statements and records to ensure they comply with relevant laws and regulations, such as the Sarbanes-Oxley Act (SOX) and Generally Accepted Accounting Principles (GAAP).
Financial compliance audits are those that focus on a company's financial statements and records to ensure they comply with relevant laws and regulations. Independent auditors, such as certified public accountants (CPAs), typically perform these audits.
They are designed to assure that a company's financial statements are accurate, complete, and in compliance with Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS), as well as any other laws and regulations that may apply.
The scope of a financial compliance audit may include reviewing a company's financial statements (such as the balance sheet, income statement, and cash flow statement) to ensure they are accurate and complete.
Auditors will also test the internal controls and procedures a company has in place to ensure that financial data is accurate and reliable and that assets are appropriately accounted for.
Financial compliance audits are required for publicly traded companies by the Sarbanes-Oxley Act (SOX) and other companies by various laws and regulations. These audits are also done by regulatory bodies such as the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).
A financial compliance audit aims to ensure that a company's financial statements are accurate and in compliance with all relevant laws and regulations, as well as to help identify and correct any issues or weaknesses in the company's financial controls and procedures.
These audits focus on a company's internal operations and processes (such as human resources and IT systems) to ensure they comply with relevant laws and regulations, such as the Health Insurance Portability and Accountability Act (HIPAA) and the Occupational Safety and Health Act (OSHA).
Operational compliance audits focus on a company's internal operations and processes to ensure they comply with relevant laws and regulations.
These audits look at specific areas of a company's operations (such as human resources, IT systems, and supply chain management) to ensure they comply with relevant laws, standards, and regulations.
During an operational compliance audit, auditors will review company policies and procedures, interview employees, and observe processes to ensure they follow laws and regulations such as the Health Insurance Portability and Accountability Act (HIPAA), the Occupational Safety and Health Act (OSHA), and the Fair Labor Standards Act (FLSA).
The audit may also focus on specific areas such as IT security, data privacy, and business continuity planning. Auditors may also review the company's incident management and incident response plans to ensure they are well documented and can be effectively executed in case of a security breach or other emergency.
The goal of an operational compliance audit is to identify and correct any issues or weaknesses in the company's operations that may be in violation of laws and regulations and may put the company at risk of fines or penalties. This type of audit also ensures that the company's operations are consistent with the company's compliance policies and procedures.
These audits focus on a company's overall compliance program (including policies, procedures, and training) to ensure they are effectively designed and implemented.
Compliance program audits are those that focus on a company's overall compliance program. These audits are designed to evaluate the effectiveness of a company's policies, procedures, and training in ensuring compliance with relevant laws and regulations.
During a compliance program audit, the auditor will review the company's compliance policies and procedures, interview employees and management, and observe compliance-related activities. The auditor will also assess the company's compliance training program and evaluate whether it is adequate and effectively delivered to all employees.
The auditor will then document any findings and make recommendations for improvements to the company's compliance program. These findings may include recommendations for updating policies and procedures, strengthening training programs, or implementing new processes to ensure compliance with relevant laws and regulations.
The goal of a compliance program audit is to identify any weaknesses or gaps in the company's compliance program and to help the company improve its compliance efforts and reduce the risk of non-compliance.
This type of audit is particularly important for companies that operate in heavily regulated industries such as healthcare, financial services, and energy.
These audits focus on a company's compliance with environmental laws and regulations, such as the Clean Air Act and the Clean Water Act.
Environmental compliance audits are those that focus on a company's compliance with environmental laws and regulations.
The purpose of these audits is to assess a company's compliance with laws and regulations related to air, water, waste, and other environmental concerns (such as the Clean Air Act, Clean Water Act, and Resource Conservation and Recovery Act).
During an environmental compliance audit, an auditor will review a company's operations, processes, and records to determine compliance with relevant laws and regulations. The auditor will also inspect the company's facilities and equipment to identify any potential environmental hazards or non-compliant practices.
The auditor will also check for compliance with the permits and licenses the company holds and ensure that the company has the necessary plans and procedures in place to prevent and respond to environmental incidents.
If any non-compliance is found, the auditor will provide recommendations for corrective action to bring the company back into compliance. The company will have to report the findings to relevant regulatory agencies and take action to correct any identified deficiencies.
Overall, environmental compliance audits are important for protecting the environment and ensuring that companies are operating in a manner that is safe for the community and the environment.
Some industries (such as banking, insurance, and pharmaceuticals) have specific compliance requirements. Audits are conducted to ensure compliance with those regulations.
Industry-specific compliance audits focus on the laws and regulations that are specific to a particular industry. For example:
Industry-specific compliance audits are conducted to ensure that a company is adhering to the laws and regulations that are specific to its industry, and to identify and correct any issues or weaknesses in the company's compliance program.
Compliance audits are conducted to ensure that a company is adhering to laws and regulations that affect its operations, and to identify and correct any issues or weaknesses in the company's compliance program.
Yes, it is easier to focus on helping customers and growing your business, but not making sure your company is compliant can lead to problems down the road.
If you have any questions about these compliance audits or wondering if your company is required to have these audits performed, reach out to one of our professionals.