For businesses, audits are among the scariest things you must subject yourself to. You’re depending on someone else putting a tick in a box and telling you you’ve done the right thing. But audits don’t have to be scary. In fact, they can be an opportunity to improve your operations, increase your efficiency, and boost your reputation.
Unfortunately, audits aren’t just procedural. They can also come with penalties. If you make a mistake, you could be on the hook for thousands of dollars. That’s why you’re reading this post. It’s here to help guide you through the challenges you’ll face and avoid any litigation that could potentially bring your enterprise to a grinding halt. Let’s take a look.
What Is Compliance And Why Does It Matter?
Compliance is the act of following the rules and regulations that apply to your industry, sector, or niche. As you might expect, these rules may come from various sources, such as government agencies, industry associations, professional bodies, or customers.
Some audits are voluntary, meaning your company conducts them itself to determine whether procedures are being followed and perhaps voluntary audit services support is provided. For instance, executives at your firm might initiate one to see whether agents are following the proper sales or financial guidelines. Here
Other types of compliance are not voluntary. These are audits the government forces to ensure you comply with regulations.
Regulators and officials believe compliance is important because:
- You can avoid fines, penalties, lawsuits, or sanctions that may result from non-compliance.
- It enhances your competitive advantage or market position by demonstrating your commitment to quality, safety, ethics, or social responsibility.
- It can improve productivity or team performance when they start using your approved processes
- It protects you from reputational damage or loss of trust that may result from non-compliance.
How Should You Prepare For An Audit?
Now that you know why compliance is valuable, the next step is to prepare for an audit. You want to ensure your business is ready to endure a systematic examination and can point to properly following procedures.
Auditors are usually external organizations, such as a regulator, certification bodies, or a customer. The latter is perhaps the most interesting, but can also do the most in the way of generating trust.
Auditors check records, compliance documents, and computer files to ensure procedures are being followed. They then match their observations to accepted standards and requirements.
Auditors may also conduct interviews with staff, observe your activities, and test your outputs or outcomes to validate that they conform to the expectations or specifications. Sometimes they will adopt a check box approach, while other times they will take a more liberal view if they believe you’re following the spirit of the regulatory code in complex environments.
Preparing for an audit is relatively simple. Here’s what you should do:
1. Plan Ahead
Don’t wait until the last minute to get ready for an audit. Start planning as soon as you know the date and scope of the audit. Figure out who you need to involve in the process and assign various roles and responsibilities. Gather a team around you that understands the audit process and can clearly communicate with the auditor.
Next, gather and organize all the relevant documents and records. You should have a full collection of accounts, invoices, and other records you need, specific to your business and industry. Auditors will follow a checklist to ensure you’re doing everything you should comply with regulations and procedures.
Always review and update your policies regularly. Train and coach your staff on what to expect and how to respond during the audit. They should understand where the dangers lie and how to avoid them.
2. Do A Pre-Emptive Self-Audit
The next step is to conduct a pre-emptive self-audit to assess your standards and compliance levels and see if you fulfill the official legal requirements. You should conduct a self-audit several weeks before you’re due for an external one.
Use the same standards or requirements that the auditor will use. Check all the areas that the auditor will cover.
If you notice any issues, document them. Then monitor and measure the effectiveness of your actions and ensure you sustain them. Your company should have processes in place to make compliance a breeze. Corporate and commercial law ought to be on autopilot.
3. Build Your Evidence Base
Auditors don’t just check you’re following the right procedures now. They also look for evidence you did in the past and will continue to do so in the future.
Therefore, during the audit, provide clear and convincing evidence that you are compliant. Be cooperative and courteous with the auditor. Answer their questions honestly and accurately. Even though they are intruding on your privacy and business, try not to be combative. It can be hurtful to see someone forcing themselves on you, but it is one of the costs of running a business.
Remember to demonstrate your policies and procedures. Show them how you operate in real time so they can observe your compliance. Explain your systems and practices. Take them on a tour of your facilities or show them a typical day’s workflow. Let them see your digital systems and how you use them to remain compliant with the law.
Highlight your achievements and improvements. Point out what you do well, and how others have recognized your efforts. Discuss the evidence that your firm is at the top of its industry because it provides customers with safe and reliable products.
Lastly, address any feedback you receive promptly. Auditors want to see you taking their suggestions seriously. Dealing with their concerns quickly reduces the risk of follow-up investigations and litigation.
4. Talk To The Auditors
During the audit, make sure you stay in communication with the auditors to ensure they have access to everything they need. Keep them apprised of your documentation and corporate information, and answer their questions quickly. Play the role of a facilitator instead of a suspect involved in a police investigation. Help them find the resources they need to ensure you’re complying with the law. Be as compliant as you can to help the process run smoothly. Offer your support to auditors at every stage of the process.
5. Follow Up On Findings
After the audit, you’ll want to follow up on any findings and take corrective action to address issues raised. You’ll also need to implement changes to prevent problems from occurring again in the future. Doing this demonstrates that you’re committed to continuous improvements and compliance.
How Can You Benefit From An Audit?
An audit is not only a verification tool but also a learning tool. You can use it to gain valuable insights and feedback on how to improve your compliance system. Think of it as an elaborate review of your firm. It provides deep and challenging insights into your operations and suggests what you might want to do better.
If you want to benefit from an audit, you’ll want to do the following:
1. Follow Up
After the audit, review the report and understand the findings and recommendations. Then take some time to thank the auditor for their suggestions, even if they are highly critical of your firm. An auditor is also a person who wants to know that their hard work is being put to good use. They will often be willing to hold conversations with you after the investigation, explaining their reasoning and making additional suggestions you can use in your business.
You should also discuss the results with your team and stakeholders. They can provide further insights regarding the audit’s findings and what it means.
Take some time out to celebrate your successes. If you got a glowing compliance report, reinforce that success by discussing it with your team.
You’ll also want to acknowledge your weaknesses as a business publicly. Make sure everyone understands the problems so they can correct their mistakes and do better in the future.
If you have a non-conformity issue, develop an action plan. Make sure everyone understands their role in the firm and what they need to do.
2. Improve Continuously
You don’t want to treat an audit as a one-time thing you never have to think about again after you pass. Instead, treat it as an ongoing process or a continuous cycle. Keep yourself updated on the latest rules and regulations that affect your business.
Top firms regularly review and revise their policies to keep them up to date. They also train and empower their staff to comply with rules set in the sector.
During your improvement process, take time to seek feedback from customers and stakeholders. Find out how you can meet or exceed their expectations. Try to benchmark yourself against leading industry standards and practitioners to see how you shape up in a comparative sense.
Wrapping Up
Ultimately, compliance is not a burden but a benefit for your business. By following the proper procedures, you can make your next audit effortless and turn compliance into a competitive edge that sets you apart from the rest.
Additional articles you may be interested in:
Leave a Reply