What Happens During An Internal Compliance Audit Process?

Internal compliance audits processes in business operations are a method of tracking and testing the practices and procedures that have been put in place so as to evaluate them against the predetermined standards.

These tests are normally done in business operation areas such as; quality control, environmental impact and customer satisfaction, accounting compliance and integrity, delivery of services, statutory and regulatory obligations and many others.

As a matter of fact, an internal compliance audit delves behind the screen that is presented by such records as profit statements, annual reports, balance sheets and the likes to actually find out what is really happening behind the scenes.

There are four main steps involved in any type of a compliance audit. These include:

a) Research

At this stage of an audit, an auditor turns his or her attention to finding out everything that he or she needs to know about an organization and its activities. The auditor determines the objective on his her audit, for instance, “to observe, document and test the delivery of services procedures so as to ensure customer satisfaction”, while in this stage.

b) Planning

In this stage, the most senior auditor is involved in the actual audit process. He or she analyzes the obtained information and then arranges to meet with the relevant personnel, mostly a senior manager or business owner so as to agree on the audit objectives and the most critical areas to be covered in the audit process. As a result of the said meeting, the aim or objective of the audit stated at the research level may then be expanded or modified. During this meeting, the target and deadlines are established and the resources in terms of people and equipment are then allocated.

d) Observation and feedback

Although in this stage everything is deemed as positive, a more accurate terminology for the same would be providing assurance. This is because if things aren’t going according to the audit plan, then the results are sometimes the opposite of the reassurance. What is really assured is that the auditor is apt to find out what is actually happening according to the set audit procedure manuals. While on this stage, the auditor observes the processes, documents them, and then tests the results against the set standards. This way, he or she is able to arrive at a conclusion that is then communicated in form of a written report to the business owners.

e) Action stage

At first, the communicated conclusion is normally presented in a draft report for review by the business owners or responsible senior managers so that the necessary changes, for instance in wording and conclusion can be agreed upon. The final report that is agreed on not only summarizes the results of the observation, but also makes recommendations for future improvements in the audited processes.

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