What Exactly Is A Regulatory Compliance Audit? Find All Details Here!

Every business is subject to certain regulatory guidelines, which must be adhered to. This may refer to regulatory norms set by SEC, IRS, EPA or others. Being compliant to the laws and regulations is not a choice, because if an enquiry or audit is initiated, your company could be at the receiving end. This may mean fines, penalties, and even revocation of licenses. Depending on the situations, management and stakeholders could be held responsible for their inaction or misleading work.

The basics

A regulatory compliance audit is basically a review of adherence to laws and regulations. Audit reports can talk about things like user access controls, policies related to security, risk management, and various other things. It should be noted that what’s checked and mentioned in these audits depend on several factors. A regulatory compliance audit for a public company could be different than one done for a private company. Sarbanes-Oxley Act is a good example of how some acts influence some compliance audits.

What are the types of regulatory compliance audits?

There are basically two kinds of regulatory compliance audits. The first one is an internal one. This can be carried out independently by the employees, but typically, the idea is to hire a company that understands regulatory compliance and find necessary flaws within the existing process. Such services also offer consultation on improving compliance and how company’s objectives can be aligned aptly with regulatory needs. The other one is an external audit. Such audits are typically initiated by agencies that are responsible for checking compliance issues. Audits will try and find if a company has been compliant to the core with all relevant state, federal or corporate regulations. External auditors do rely on internal audit reports at times, especially if these audits were done independently.

Things to know

Today, businesses have to operate in an environment where regulations and laws are enforced in a stringent way. At times, business owners have no clue as how they should deal with regulatory compliance needs, and as a result, they often end up in legal and procedural mess that can be hard to ignore. Fines and penalties are not just about financial loss, but will also impact the company in a big way, especially as far as brand value is concerned.

Don’t take chances with regulatory compliance, even when the issues may seem small. Hire a firm today to get an independent audit done.

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