Copyright © Daniel Cullinane CPA.
Daniel Cullinane CPA
25 Plaza 5 25th fl Jersey City NJ phone 732-516-1648 fax 732-516-9778
Compliance audits are a formal review to determine whether or not a company is conducting its operations in accordance with a contractual agreement. These audits are usually conducted by a public accounting firm, third-party organization or government regulatory agency. Compliance audits usually focus on a company’s business operations. Financial audits review the company’s compliance with national accounting standards or other financial regulations.
Compliance audits usually start with an interview of company management. Business owners, directors and operational managers are included in this process. Auditors use these interviews to determine how well each individual owner or manager understands the terms of their contractual agreement. Business owners may also undergo a contract review process where auditors walk through the contractual agreement to review different parts of it. Auditors typically use this meeting to create an audit plan. The audit plan lists specific areas in the company where auditors will test or review business processes against the contractual agreement.
Employee performance is also subject to compliance audits. Auditors may interview employees to determine how well they understand their responsibility to the company’s contractual agreement. The employee interview process is usually done without a manager present. This allows auditors to receive truthful employee answers that are not influenced by the presence of a superior. Once employee interviews are complete, auditors can observe the employee completing their normal job function. Auditors will assess if the employee completes business functions according to the company’s standard operating procedures and contractual agreement.
Auditors will review the company’s individual business processes to determine whether or not they are in compliance with contractual agreements. Auditors typically measure how well the company completes functions and if any compliance violations are present in the system. Violations can include low-quality products, wasting economic resources and billing clients, safety concerns or subverting government regulations. Auditors typically note all violations and attempt to determine how widespread the violations may be in the company’s processes.
Company management and auditors usually have a final wrap-up meeting once the compliance audit is finished. This meeting allows company managers to review the auditor’s report prior to the public release of this information. Auditors will also provide the company with specific suggestions on correcting violations or other process errors. Third-party organizations may be included in this meeting so they understand how well the company is maintaining their contractual agreements. Upon the meeting’s conclusion, auditors will release their official report for review by each party in the agreement and the general public.
2500 Plaza 5 25th fl Jersey City NJ 07311 phone 732-516-1648 fax 732-516-9778