Compliance auditing requires a comprehensive review of the organisations ability to meet its legal & regulatory obligations. Audit reports form the primary control to evaluate the effectiveness of the organisations management system, taking into consideration the frequency of errors in any given area. Correct scoping of an audit will direct the auditor to preform reviews of critical areas such as policies and process conformity.
The compliance audit varies in complexity due to the context of an organisation and the types of processes it performs, where data is an aspect to be considered the amount of data and its location and control will also need to be audited on a regular basis.
In all cases, organizations must be able to demonstrate compliance by providing an audit trail, this trail will consist of multiple records and logs often generated within one or more management software tools, as well as internal and external audits.
The difference between an Internal and an external/3rd party compliance audit
Internal audits are carried out by employees of a company to asses and identify the overall risks to compliance and information security and to determine whether the company is following its own processes and policies. Internal audits are planned throughout the audit year and reports submitted to management to identify areas for improvement. Internal audits measure company KPI’s against output and strategic risks.
External/3rd party compliance audits are formal compliance audits that are carried out by certified auditors (Normally IRCA) independently and follow a specific format that is determined based on the standard/law/compliance regulation being assessed. External audit reports measure if an organization is complying with thier own requirements and those of their given regulator/s.
An auditor’s report is used by regulators and certification bodies to assess degrees of noncompliance, or to prove regulatory compliance. An external compliance auditor will often use internal audits to further evaluate compliance and regulatory risk management efforts and possible audit trails.
Compliance audits are part of the governance, risk and compliance of an organisation
Compliance auditing, either internal or external, can help a company identify weaknesses processes and lead to paths for improvement. 3rd party audits are not normally conducted to provide guidance at a compliance audit but the results can help reduce risk, and avoiding potential legal issues related to noncompliance.
Compliance programs are in a constant state of flux as existing regulations evolve and change and new regulation is implemented. Compliance auditing provides an outline of internal business processes that can be changed or improved as requirements change.