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Conducting Self-audits Saves you Compliance Headaches Down the Road

Like going to the dentist, undergoing a company compliance audit is something that no one really enjoys—but it’s necessary to avoid bigger issues down the road. Fortunately, like your six-month checkup, it’s possible to reduce your risks with adequate preparation. Think of a self-audit as the organizational equivalent of flossing your teeth.

Regular self-audits help you be proactive about identifying and mitigating possible risks before facing the actual consequences of noncompliance. Mistakes such as misclassifying an employee or calculating the wrong tax for a worker can leave you on the hook for back taxes and other potential penalties, not to mention damage to your reputation if the problems are significant and time lost trying to re-mediate everything.

How to conduct a self-audit of HR

Self-auditing is a multi-step process. Let’s run through the key steps for planning and administering an audit.

1. Decide who will oversee the audit, and when

Normally, the teams that own your HR processes will conduct the audit, since they’re reviewing their own practices. However, enlisting outside help (including legal counsel) may also be prudent, especially if you need a fresh set of eyes on your activities. Such an unbiased, independent perspective can reveal important opportunities for improvement that wouldn’t be flagged otherwise, plus it may reduce legal exposure during any litigation. Also, set a consistent interval for your audits. Doing one annually provides important regular insight on the state of HR.

Document Record-keeping Process

2. Document all HR operations and record-keeping practices

A self-audit needs a well-defined scope. If you haven’t done one in years or ever, be sure to cover every aspect of HR. Alternatively, if you’re concerned mainly about a particular function and have been auditing regularly, be more specific. Make a list of anything relevant to the chosen scope, from recruiting to labor compliance reporting. Along the way, review record-keeping practices to establish any liabilities. Relying on a big stack of papers is much riskier in this respect than having a more modern, automated online system that greatly simplifies governance.

3. Create and distribute staff surveys

To get a basic sense of how HR is functioning, draw up some surveys for your staff to answer. Typical questions might include:

  • How employees are onboarded and acclimated to their new roles.
  • The frequency of performance reviews and how they are documented.
  • Where do you go to make changes to your tax withholding?
  • What policies exist for employee attendance and timekeeping.

Once you have the right questionnaires for each aspect of HR, distribute them to staff and collect their responses.

HR Staff Survey

4. Analyze and share questionnaire results

After the questionnaires are completed and returned, look through the results and pay attention to any recurring responses or areas for concern. Focus on possible major risks related to employee misclassification, conflicts with federal or state family and medical leave legislation, and errors with Form I-9 for employee verification. Benchmark everything to see how your current performance compares to similar organizations. Finally, share your feedback on the results with the relevant personnel to collect additional inputs and begin necessary remediation.

5. Set up training’s to help HR improve

Training sessions are important not only for introducing new best practices, but also for reinforcing existing ones. In the wake of a self-audit, they can help HR improve how it handles employee records, evaluates performance, and complies with applicable regulations. It’s a good idea to create a formal action plan for how these training’s and related activities will proceed, and to emphasize the continuous nature of any improvement.

The benefits of regular self-auditing

We mentioned several big risk areas that self-audits help you address. Form I-9 verification is near the top of the list, as it’s easy to miss a step if you aren’t careful, which in turn can result in costly fines for even just a few errors.

For example, an audit might reveal I-9s without signed/dated attestations from employees, along with forms where the employer hasn’t filled in details such as hire date, business address, and expiration and issuing authority for presented documentation. As of 2019, ICE was levying fines of up to $2,292 per substantive Form I-9 violation.

Self-auditing, following the process outlined above, reduces the risk of noncompliance. Automating your compliance programs with a partner like CIC Plus can help eliminate your compliance risks while also making audit preparation easier. Our solutions help you stay up to date with changing regulations and keep a complete electronic record of all the data you’ll need to survive a real audit.

Learn more by contacting our team or by taking a look at our regularly updated blog.

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