Compliance audit – Definition, what it is and concept

A compliance audit is that audit modality in which it is thoroughly verified that a company or institution complies with the regulations and legislation corresponding to its sector, environment or territory.

Through the performance of a compliance audit, many companies of all types have a good practice control and security tool.

This type focuses on all current legislation being respected in the economic day-to-day operationally and administratively.

Alternatively, a correct execution of such mechanisms ensures for the
companies that your internal control works correctly, avoiding defaults
regulations and system failures.

Within this type of evaluations also important details such as the correct pass
preparation or training of the workforce according to the activity carried out, the attention to the security measures established by law or the operation of the gears of the structure of the company attending to the economic sector in which it carries out its work.

Characteristics of the compliance audit

This audit modality has a series of characteristic features that distinguish it from other types of auditing:

  • Thoroughly analyze the total financial operations undertaken by a company or institution, as well as any administrative action
  • This study necessarily stops the in-depth study of all existing documentation, in the form of reports or external presentations of information and with financial, legal or administrative issues.
  • It puts in value the daily business activity with the legal framework of the territory in which the company is located, looking for possible inconsistencies or anomalies
  • It also takes into account the internal regulations of a company, expressed in its statutes and codes, beyond the aforementioned territorial regulations
  • A compliance auditor must be constantly updated, being aware of the constant changes that take place in the different sector, territorial or national / plurinational laws
  • Following the detection of failures in the internal control of a company, a compliance audit must lay the foundation for its improvement or correction
  • Despite these distinctive nuances, compliance auditing seeks the same as the rest of the expressions in the field of auditing: the improvement of the functioning of commercial companies and the achievement of better levels of efficiency internal according to parameters or standards.

A simple example of this type of evaluation would be the study of a chemical company.

The compliance audit will observe if it operates according to the legality regarding the professional preparation of its employees and technicians. At the time it is analyzed if the waste treatment is carried out in a legal way, to mention another key observation point.