There is currently a lot of confusion in distinguishing the compliance audit process and the internal audit process. In fact, these are two completely different activities, although both are aimed at risk management in the enterprise.
Difference between Compliance Audit and Internal Audit #
Compliance audits are performed by independent auditors from independent audit firms providing compliance audit services or regulatory agencies. These auditors typically follow a checklist based on regulatory compliance audit principles, standards, regimes, and standards to assess compliance. Compliance audits help ensure the objectivity, independence, and results of the audits given by an external party.
Internal audit is performed by an internal auditor within the enterprise or by an employee acting as an internal auditor. Their role is to check compliance and ensure that the organization is consistently following regulations and standards.
The independent auditor can use the results of the internal audit's work in understanding the control environment to assess the risks of misstatement in the reporting as well as to identify factors that may affect operations. its independent audit.
Why is compliance audit important? #
Compliance audits serve many purposes, such as:
- Xdetermined the holes Vulnerabilities in the system: One of the objectives of a compliance audit is to check that policies and procedures meet compliance requirements. If there is non-compliance, as well as loopholes in the non-operation of the system, the auditor will record it and report it to the company's management.
- Ghelp improve and fix the vulnerability: When vulnerabilities are discovered, the company can consider corrective and preventive actions to close the gap and improve the quality and efficiency of work.
- GMitigate risks and pave the way for compliance with other frameworks. Closing the loopholes in the system not only improves work efficiency but also helps the company reduce risks from production and business activities. In addition, when the company emphasizes compliance, compliance will be easily expanded and quickly applied when there are new requirements and new standards from investors and partners.
- Avoid fines or legal trouble. This is what companies have always wanted. Avoiding fines, large fines and legal troubles helps the company maintain its position and reputation in the market. In addition, saving the company's costs on expenses that could have been avoided, optimizing capital and profitability.
Preparations for a compliance audit #
First, your firm and your audit firm must schedule an official audit date. A report on the results of the compliance audit (including nonconformities and recommendations) is issued after the conclusion of the audit. Depending on the level of non-compliance, your company may have to put in place immediate solutions or have an action plan to fix system vulnerabilities.
Here are some steps to prepare for a compliance audit:
- Prepare the necessary documents. The documents should clearly state the work process, how your company does it and comply with the regulations. At the same time, there must be other documents to be provided to the auditor upon request.
- Internal review first. The self-assessment is to identify gaps in advance, to understand the general situation of your company before the external auditors do it. The self-assessment helps the communication between the company and the auditors to be clear and quick when solving or discussing arising issues.
- The relevant department understands the need for a compliance audit: In the process, the employee may unintentionally not comply with the regulations. Depending on the level, it can lead to low to high risks, which can appear immediately or need a long time. Therefore, the staff's recognition of the need for a compliance audit to help overcome this risk will increase the effectiveness of the audit.
Understanding the difference between compliance audits and internal audits helps businesses be proactive in finding and performing the right services for their risk control purposes. If you need advice on compliance audit services, please contact EXPERTIS's Consulting Department for answers.