Human Resources has traditionally been defined as the total of all activities relating to recruiting, training and retaining the people who possess the knowledge and skills necessary to advance the objectives of an 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 Human Resources responsibilities often feel overwhelmed.  How can today’s HR professional keep up with the ever-changing world of federal regulations and ensure 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 inspectors auditing product as it goes out the door.  Auditing the Human Resources function is a relatively new concept, but one that pays big dividends.

A Human Resources audit assesses your level of compliance with federal and state laws and evaluates the effectiveness of the HR function by comparing its activities to documented procedures. 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 the HR function must be reviewed.

The results of a comprehensive audit should:

• Clarify the  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.

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 paperwork, employment-related policies and procedures, and outstanding or potential legal claims.
• A tour of the workplace.
• A thorough review of: recruitment and selection procedures, compensation and benefits administration, discipline and termination procedures, and health and safety practices.

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.  After the findings have been 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.

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 an audit, ensure top management is willing to invest the resources needed to make changes.