All businesses are required to comply with rules and regulations, including, for example, taxation and superannuation rules, employee entitlements, health and safety legislation, public health orders, etc. The risk of non-compliance ranges from legal and financial penalties, status loss (registration, licence, etc.) to loss of reputation, which in turn could adversely impact business relationships and viability.
Organisations thus have a responsibility to ensure compliance, including through the establishment of good systems and processes, management oversight, and independent audit. Compliance audits are also a requirement of some government funding and grants programs.
Compliance audits can be costly and feel repetitive, particularly if an organisation already has a crowded, risk-based internal audit program. However, if done correctly they can generate significant benefits to your organisation.
So, how does an organisation get the most from a compliance audit? Here are a few tips:
- Focus on improvement – while it’s easy to “tick and flick” such an approach does not add value to the organisation. Rather, a mature approach is required to understand the business, ask the right questions, and suggest better ways of doing things. This might also include recommendations for policies, procedures, escalation processes, training, etc.
- Use data analytics – the use of data analytics tools can identify exceptions and in some cases, reduce sample testing times. Importantly, data analytics can also support an organisation to improve data quality and system enhancements.
- Analyse the root cause – it is important to uncover why systems are not operating as intended, errors are made, and staff have found workarounds. Maybe the organisation has outgrown its systems and processes. A good compliance audit works with the business to establish the root cause and suggests practical solutions to prevent reoccurrence.
- Adopt an educative approach – an experienced compliance auditor will work with all levels of the business to understand systems and processes, test compliance, share past experience and provide evidence-based examples as to how to improve controls.
- Think big picture – compliance auditing should extend to related activities, including for example, records management, accounts payable, system user access, employee health and wellbeing. While not necessarily the immediate focus of the audit, a skilled compliance auditor will ensure that systems and processes are aligned and consistent with better practice.
- Build internal capacity – compliance and continuous improvement should be an ongoing focus, not a once a year event. An important value-add in any compliance audit is the collaborative development of simple “checklists” to increase ownership and build internal capacity.
Centium's Approach to Compliance Auditing
An effective compliance audit enables well-run organisations to continuously improve, as well as demonstrate conformity with various rules and regulations. We work with organisations across various industries and sectors to deliver cost-effective, value-adding engagements.
Centium offers an independent, insightful and practical perspective. Importantly, we develop strong partnerships with our clients to provide assurance, build capacity and facilitate ownership of outcomes. We are also available to provide advice and facilitate management discussions regarding risk.
Browse Centium's range of Risk & Assurance services or talk to us about how we can help.