SumTotal Blog

How to Create a Robust HR Records Audit Process

March 1, 2022 | by SumTotal Blog | 4 min read

Audits.

The word alone can stress out HR teams, who may associate audits with exposing critical process failures and noncompliance.

As uncomfortable as it can be to uncover these types of issues, an HR records audit may prove to be a major business asset by highlighting the extent of known issues and revealing previously unknown areas of concern that can be addressed before they get any worse.

So, what’s the differentiating factor that determines whether an audit is something to be feared or embraced? A clear process.

In this blog, we’ll discuss why a well-defined audit process is important, as well as how you can build one that gets consistent results.

Why Are HR Records Audits Important?

Auditing your HR records is critical because it can help identify gaps in your employee and business records management, and may reveal missing documentation that could lead to compliance issues down the road.

The compliance factor is especially important. Ultimately, it’s not enough to simply be compliant — you need to be able to prove it with complete, secure, and well-organized records. After all, even seemingly minor issues like a missing signature or outdated file can lead to fines and penalties.

Regularity is a key part of many corporate processes, yet it’s impossible to make a blanket statement about how often a business should audit its records. For companies in highly regulated industries, quarterly audits may be required. For those in other sectors, conducting a comprehensive audit once a year may suffice. Whatever schedule you adhere to, note that you may need to perform ad hoc audits if you notice something amiss or if there’s a change in the law.

Building an Audit Process for Your HR Records

Whether an audit is ad hoc or planned, it’s important for your HR team to follow a clear and consistent process. To ensure your audits are timely, specific, and can be used as part of a wider effort to drive continuous improvement around HR record-keeping, keep the following points in mind.

Understand What You Want Your Audit to Accomplish

Before you start auditing your records, take some time to think about why you want to do an audit in the first place. Maybe the motivation is as simple as needing to conduct your yearly records check or wanting to identify areas of inefficiency.

Regardless of what precipitates an audit, your first step is to develop an understanding of exactly what you need to accomplish. Here are a few questions you can ask yourself to get a better sense of the purpose of your audit:

  • Is the audit proactive or reactive?
  • Is the audit intended to be businesswide or specific to a functional area?
  • Are you performing the audit to ascertain compliance or to assess efficiency?

If you don’t have clear answers to these questions, you may not need to perform an audit at all — or you might have to dive deeper to get a better idea of the issues at play.

Set Your Audit’s Scope and Timeline

Once you’ve determined the business purpose of your audit, your next step is to set a scope and timeline. Because an audit without a defined scope runs the risk of getting derailed by additional requests or input from other stakeholders, it is critical to pre-emptively define the following:

  • Who will perform the audit
  • The boundaries of the audit
  • Any constraints
  • A timeline for completion, with specific milestones
  • A specific output

Collect Relevant Data

After you’ve set the scope of the audit, it’s time to start looking through records — but be sure to stay focused on the reason you’re performing the audit in the first place.

For example, if you intend to check that all files have signatures, be sure to only look at the signature pages and exclude anything you might notice that’s outside of the scope. If your goal is to make sure every employee has a valid identification form on the books, don’t expand the audit to other types of records.

Compare Your Findings to Benchmarks

Once you’ve collected your data, you’ll need to determine whether any remedial actions should take place — and, if so, what form these should take. You can do this by comparing your results to benchmarks such as documented industry standards, regulatory requirements, and even the findings of your own past audits.

Determine Immediate Next Steps and Long-Term Improvements

Reporting and documenting audit results can drive continuous improvement in both compliance and HR processes. Thus, the output of an audit will typically take the form of a report or presentation to stakeholders that includes the data collected, the key findings, and recommendations for improving HR record-keeping. It should answer the following questions:

  • What needs to be changed right now (i.e., what are the immediate next steps)?
  • What long-term improvements should be initiated?

The Bottom Line

Having a clear process in place will help facilitate efficient HR records audits and ensure every audit turns up actionable information you can use to monitor compliance and optimize practices.

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