Compliance Audits – What You Need To Know To Avoid A Penalty
These days it seems every business is required to follow one or more sets of laws or regulations based on their industry type.
Failing to comply with the relevant regulations run the risk of non-compliance and can lead to financial and reputational damages. Businesses can avoid non-compliance and associated costs, and avoid upsetting their customers and damaging their brand.
This article will discuss the ways to avoid non-compliance and issues raised during audits.
What are compliance audits?
Compliance audits are formal reviews or evaluation of an organisation’s processes to make sure the applicable industry rules, codes of practice, regulations, and guidelines are being followed. A compliance audit report states whether the organisation is compliant to the governing rules and helps establish the brand’s reputation amongst customers and stakeholders.
Why are compliance audits important?
Compliance audits are important to ensure that companies meet the basic standards of operation and business activities. Audits help verify requirements and processes in areas such as:
- HR policies
- Health and safety
- Information security
- Environmental management
- Management standards
- Risk management practices
What are the types of compliance audits?
1. Health Insurance Portability and Accountability Act of 1996 (HIPAA)
This standard was implemented to ensure the security of information in the healthcare sector. It helps define how health sector insurance companies must place technical, physical, and administrative safeguards on, and store and share health data securely.
2. Payment Card Industry Data Security Standard (PCI-DSS)
The PCI standard was set in place to ensure that credit card companies are managing customer data securely. It provides clear guidelines on how customer data should be stored and handled.
3. Systems and Organisational Controls (SOC2)
This standard applies to companies that store customer data on the cloud and requires them to follow strict procedures and controls to ensure the safety of this data.
4. Sarbanes-Oxley Act of 2002 (SOX)
This act requires organisations to prevent and respond to illegal business activities without any delays. It emphasises on improving the quality and reliability of corporate disclosures.
5. International Organisation of Standardisation (ISO)
ISO works with more than 160 countries to ensure business practices are standardised. It helps businesses manage just about anything from the security of its assets including financial information, employee or third-party data, and intellectual property, quality management, environmental management, and so on. An ISO audit involves a risk management process that analyses business practises, technology, and employees.
6. General Data Protection Regulation (GDPR)
Primarily meant for data protection of citizen of the European Union, it applies to all organisations who process their data. Failing to comply with GDPR can result in hefty fines.
How can you avoid compliance audit penalty?
1. Perform internal / self-audit
Conducting self-audits on your business with the help of internal employees can help prepare for external audits. This activity also known as internal audits help businesses improve on their operations and avoid non-compliance risks.
2. Keep current with compliance regulations
Regulations keep changing based on a variety of conditions. If your business still follows regulations that are now obsolete, you may land into serious trouble. Watching out for new regulations that apply to your business and following them in time before going through an external audit can avoid non-compliance.
3. Train your audit team
Having a well-trained and appropriately qualified compliance audit team can help conduct efficient internal as well as external compliance audits. This way, external auditors can spend little time asking for data and focus more on guiding your team regarding business improvement.
4. Use technology to stay complaint
Compliance audit management systems help businesses manage their audits efferently. Cloud-based integrated compliance management software can also help your business manage and improve compliance easily. This technology also proves cost-effective and helps higher management in many ways.
Compliance audits are extremely helpful for the efficient operations and growth of a business. Mobiom compliance audit management software can help you stay on top of the compliance game. Call us at Mobiom for a free demo today.