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STATUTORY COMPLIANCE AUDIT

The elements of this Statutory Compliance Audit carry a mandatory requirement in that Duty Holders have a legal obligation to ensure that their premises are compliant. This audit identifies the extent to which the facilities comply with these statutory regulations.

This important audit identifies whether staff and visitors (including people with disabilities) are able to operate within a building without detriment to their well-being and confirms that the building environment does not compromise the quality of service that staff are able to provide.

It lists not only recommendations for improvement where items are mandatory but will suggest improvements for the general safety and welfare of building users.

These regulations apply to a wide range of workplaces, not only factories, shops and offices but also schools, hospitals, hotels and places of entertainment.

Types of statutory compliance audit:

  1. Statutory compliance audit in accounting.

  2. Statutory compliance audit in finance.

  3. Statutory compliance audit in banking.

  4. Statutory compliance audit in human resource.

  5. Statutory compliance audit in payroll.

  6. Statutory compliance audit in taxation.

Objectives of compliance audit:

  1. Effectiveness Assessment

A main objective of conducting an internal or external compliance audit is to assess the overall effectiveness of a business’s compliance practices and protocols. While examining processes and transactions, a compliance auditor must determine whether the item being examined complies with established standards.

  1. Deficiency Identification

A compliance audit also uncovers intentional or unintentional weaknesses or deficiencies in a compliance program. The many and ever-changing standards and regulations with which the business must comply can sometimes cause compliance programs to be weak or unintentionally deficient

  1. Ongoing Verification

Compliance programs found to be lacking may be assigned corrective actions to correct the deficiency or deficiencies. When this happens, verification becomes an objective in a follow-up audit or the next annual compliance audit.

  1. Program Improvement Recommendations

A final audit report presented to the business owner reveals an additional objective of a compliance audit. In addition to a written effectiveness assessment, a final report often includes suggestions and recommendations for how the business owner can improve the program. 

Compliance audit process:

Compliance audit process include following steps:

  1. Identification of applicable statutory rules and regulation.

  2. Compliance check as per provision of various acts and rules.

  3. Gap identification and recommendations.

  4. Presentations of the discussion on observations finding.

  5. Submission of final report.

Advantage of Compliance Audit:

  • Through a Compliance Audit, the management will quickly identify the issues of the company that need to be addressed. Instead of spending time on Benchmarking, compliance audit plus self-assessments are better in solving the concerns of the company.  

  • Having a compliance audit program performed each year will enable the management to identify and manage program priorities, learn potential weakness and develop a consistent process.

  • Another benefit is that relevant findings can be addressed immediately. Compliance reviews can be focused on specific geographic operations or functions such as the third-party due diligence and contracting.

  • Compliance program audits also provide important metrics that can be used as a basis to report it to the company’s management. The management can also learn valuable information by comparing audit data from one year to another. This information, in turn, provides relevant data for assessing the compliance program.

  • With a compliance audit, the company will produce more effective strategies to improve their company. Knowing the errors is an effective way to improve and knowing all the things that needed to be avoided.


Disadvantages of compliance Audit:

  1. Frauds by management

Auditing fails to check planned frauds. The management can play tricks to manipulate the accounts in order to conceal their inefficiencies. The audited accounts could not show the true view.

  1. Wrong certificate

Auditing is based on many certificates taken from management and other persons. Auditing may fail to provide the desired results. When certificates provide wrong information. 

  1. Misleading clarification

Auditing fails to disclose correct information. The management may not provide correct clarification. The auditor is bound to present his report even if the clarification is not true.

  1. No true picture

The auditing does not present a true picture. Auditing fails to disclose the true picture when figures have been manipulated.

  1. No correct view

Auditing fails to present the correct view. There are limitations of accounting so figures are not facts. These figures are based on opinion. Thus, auditing is unable to disclose the correct view.

  1. No suggestion

Auditing is not concerned with the management policies. The auditor cannot guide management for better use of capital. He is unable to suggest what should have been done.