Similar to a financial or tax audit, an HR audit gives businesses the opportunity to identify any potential human resources compliance issues and establish HR best practices.
An HR audit reviews an organization’s essential human resources functions to determine the organization’s compliance with state and federal regulations.
Do your HR audit processes meet all the requirements of our six-step HR audit checklist?
Determine the scope: The first step of conducting an HR audit is to determine the scope of the audit. If an HR audit has never been conducted, a comprehensive review of all policies and procedures is recommended. Going forward, businesses may choose to conduct audits that focus on specific HR functions, such as payroll or record keeping.
Develop a plan: The next step is to develop a plan for conducting the audit. Identify the goals of the audit, assemble the audit team and create a timeline for completing the audit.
Gather and analyze the data: Once the audit begins, the audit team should gather all the applicable documents and forms under the scope of the audit. The audit team should also review current and potential legal actions.
Produce a report: After all of the necessary information has been analyzed, the next step is to create a report with the findings of the audit. This report should identify any strengths and weaknesses found during the audit, as well as offer recommendations to correct any instances of noncompliance.
Create an action plan: Once the audit is complete, company executives should meet with the audit team to discuss the findings and formulate a plan to address each problem or area of concern identified in the report. Action items may include changes to policy, procedures and/or training practices. Organizations should also consider their available resources when setting a timeline for correcting noncompliance issues, and ensure any corrective actions are realistic and achievable. In addition, organizations should take measures to ensure the audit information is kept confidential and protected from unintentional disclosure.
Evaluate the progress: Once corrective measures have been implemented, organizations should continuously monitor and periodically review the new processes or procedures to ensure the organization stays compliant.