Human Resources has traditionally been defined as the total of all activities related to recruiting, training and retaining the people who possess the knowledge and skills necessary to advance the objectives of the organization.
Today, smart companies realize that Human Resources also encompasses policy development, compensation management, safety and career development, among other things.
With this broader scope, it is no wonder those charged with H/R responsibilities often feel overwhelmed. How can today’s H/R professionals keep up with the ever-changing world of federal regulations and ensure that their organizations are in compliance? In a word…Audits.
Most businesses do not think twice about an accountant auditing the financial statements or quality control auditing product as it goes out the door. Auditing the H/R function is a relatively new concept, but one that pays big dividends.
What information should be looked at during an audit of an organization’s H/R practices? It’s simple….ALL OF IT!
Just as you would not exclude anything on your financial statement during an IRS audit, to be certain your organization is in full compliance, all facets of your H/R function must be reviewed. For example, an audit could be broken down into these areas:
• Recruitment
• Selection
• Wages/Payroll
• Discrimination/Harassment
• Health & Safety
• Discipline & Termination
• Required Postings
The audit process should include:
• Interviews with key managers and HR staff.
• Interviews with employees, as appropriate, to evaluate employee relations issues.
• A detailed review of HR records and outstanding or potential legal claims.
• A tour of the workplace.
The audit can be conducted by in-house staff, provided they are able to provide non-biased results, or by an outside consultant. One caveat: be prepared to uncover some unpleasant results. In such a situation, management must be dedicated to taking action to remedy deficiencies. Prior to initiating an audit, ensure top management is willing to invest the resources needed to make changes.
Handling the Results
The results of a comprehensive audit should:
• Clarify issues that prompted the audit in the first place.
• Identify areas where the organization is not meeting minimal legal standards and the corrective actions needed.
• Confirm that established policies and procedures are current and consistently administered.
• Evaluate the use of staffing for HR administration.
• Help establish future HR priorities.
Once the audit is completed, the findings must be reported to management throughout the organization. The audit report should include relevant laws or best practices; penalties/risks associated with current practices; findings; and recommendations for corrective action.
Once the findings are reviewed, the establishment of a post-audit action plan is crucial to ensure that accepted recommendations are effectively implemented.
As with all action plans, the post-audit plan must:
• Be realistic and achievable.
• Identify desired results.
• Identify who is accountable for the results.
• Establish target dates for completion of assigned tasks.
If your organization needs outside help with an audit, or would like assistance with designing the post-audit action plan for an audit you have performed in-house, contact me today. My expertise can help streamline the audit process for you!
