Compliance Audit

What is it? What are some Best Practices to make it Effective? How to Run Compliance Audits that Drive Continuous Improvement (CI)?

A robust compliance audit process is needed to keep pace with regulatory changes, modify processes as needed, and ensure your QMS is up to date.

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What is a Compliance Audit?

A Compliance Audit is a formal evaluation of an organization’s procedures, policies, and operations, primarily focused on verifying adherence to internal rules, regulations, standards, and policies. It ensures consistent audit compliance by assessing the resilience of compliance preparations, security policies, risk management processes, and user access controls. Beyond being a regulatory requirement, compliance auditing serves as a strategic tool to help organizations maintain operational excellence while minimizing compliance risks.

What is the purpose of a Compliance Audit?

The main goal of compliance audits is to assess how effectively an organization follows internal bylaws, policies, regulatory standards, and codes of conduct. An audit evaluates both operational efficiency and regulatory compliance. While internal audits focus on internal process adherence, compliance auditing ensures the organization meets external obligations, such as industry regulations, contractual requirements, and corporate governance rules. By aligning internal and external compliance efforts, organizations enhance overall risk management and operational resilience.

Internal Audits: Internal audits enable an organization to follow processes, procedures, and guidelines. On the other hand, a compliance audit ensures that the organization is fulfilling outside obligations such as agreements, rules and regulations, or standards. Internal audits may be financial, operational, IT, or regulatory, but are conducted using formal audit approaches prior to an outside compliance audit to ensure that the organization is following the standards.
Compliance Audits: Unlike internal audits, compliance audits are outward-facing and conducted to verify adherence to external regulations, standards, and codes of conduct. Organizations use these audits to demonstrate accountability to regulators, stakeholders, and customers. Compliance auditors play a vital role in this process by evaluating documentation, performing site inspections, and interviewing employees to assess the level of compliance.
Operational Audits: Operational audits identify how effective and efficient various departments and activities are and whether these areas operate in line with the mission and purpose of the organization.

Audit monitoring helps organizations to validate processes, including:

The security of critical data
The records of the financial departments
Health and safety
Payroll and HR policies
Management standards

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The History of Compliance Auditing

The concept of auditing and compliance grew primarily during the industrial age, as governments, professional groups, and social welfare organizations sought enhanced monitoring and control over business practices. By the 1970s, internal auditing emerged as companies aimed to ensure the integrity of their own processes. This era also saw the introduction of voluntary certification standards, such as ISO 9000, alongside a rise in government monitoring authorities and the formalization of audit and compliance standards.