Why your Business Needs a Compliance Audit
What is compliance auditing? Compliance has become increasingly topical in recent years, with businesses across all sectors focusing intently on compliance. Compliance auditing is an important part of this to ensure that your business is following the regulations and standards applicable to your industry.
Now, you might be wondering why we need to do this in the first place. Let’s take a look at why these audits are so critical, from ensuring the best quality standards to avoiding hugely significant fines and penalties.
Why are Compliance Audits Important?
Compliance audits are critically important for companies for a few reasons. They cover various areas of the business, such as:
Standards of Quality
As the name itself suggests, this is an assessment of your company’s products. An unbiased audit will greatly help your customers to make an informed decision before buying your product.
If your product is robust, reliable and up to standards, then there is nothing to worry about as the audit will simply confirm this. However, if the audit tells you that you need to make improvements to your product, then it is important that you take appropriate action immediately.
Impact on the Environment
Is your business following environmentally friendly policies? These days, eco-friendly practices are not only part of any company’s moral duty to the community and the planet, but they are also a compliance issue. Governments have introduced a range of laws and regulations aimed to protect the environment, and businesses need to follow them. The audit will check your compliance with these rules, and assess your company’s impact on the environment.
Health and Safety Standards
This is extremely important for firms that operate factories and other manufacturing operations, as well as other potentially hazardous workplaces such as labs or healthcare facilities. However, following health and safety guidelines is a must for the wellbeing of your employees, no matter your business or the industry that you work in.
Looking after their employees should arguably be the number one priority of any company. The same applies to the products that you give to your customers. Proper care needs to be taken so that they are compliant with the latest regulations and standards. This includes a range of measures, from avoiding the spread of a virus like COVID-19 to keeping employees safe from electrical hazards.
Human Resources Policies
The HR or Human Resources department is one of the most important parts of any organization. After all, they are responsible for the wellbeing of the employees. Every company needs to have robust HR policies in place that helps the business to comply with all relevant regulations.
The first name that comes to mind when we talk about financial records is Enron. This company famously defrauded their investors to the tune of millions of dollars by manipulating their financial statements. This is just one example of why is vital that company financial records are closely and regularly audited.
This protects shareholders, employees and customers, as well as helping businesses to demonstrate that they are trustworthy. Having exemplary financial records to show your stakeholders will help to build confidence in your business and could allow you to attract investors or secure funding. Regular auditing will also allow you to pick up any irregularities, and therefore identify and address any internal issues, from human error to malicious insiders, as soon as possible.
Data Security and Privacy
There have been too many cases in recent times when security breaches have led to customers’ personal data being leaked. This is detrimental for the individuals concerned, and devastating for the business, destroying its reputation. Understanding the importance of data security, governments are constantly introducing new regulations to keep consumer data safe and secure.
This means that staying compliant in this area involves keeping on top of these changes and staying up to date with the latest changes. This is the only way to ensure that your business stays compliant with current regulations. Failing to do so could expose you to significant government fines and penalties, and could even result in your business being completely shut down by the authorities.
A Word of Advice
You can conduct a compliance audit in-house, but to get the best results, it is best to hire an external consultant. This third-party will not only be an expert in the field of compliance, but they will conduct the audit completely impartially as they wouldn’t have any vested interests. You may find it worthwhile consulting with various experts across different fields to ensure compliance in these specific areas. For example, you can consult with a lawyer regarding legal compliance, and a company like phscompliance.co.uk to ensure your electrical systems are compliant.
However, you approach it, make sure you take your compliance seriously and conduct regular audits