What is a Compliance Audit?

A compliance audit is an independent review to check whether an organization or company is meeting the requirements of a compliance standard or regulation. Some audits deal with cybersecurity, quality management, workplace safety, or environmental compliance. What will be audited will depend on the applicable standard or regulation, like HIPAA, SOX, GDPR, or one of the various ISO standards. 

Here’s an example: Manufacturing companies usually have their management systems based on the ISO 9001 standard. But to get an ISO 9001 certificate or maintain their certification, these companies are required to undergo periodic audits and show consistent compliance.

What is the Difference Between a Compliance Audit and an Internal Audit?

A compliance audit differs from an internal audit. The former is external, meaning it’s carried out by independent auditors from compliance audit companies or regulatory bodies. These auditors usually follow a checklist based on the compliance audit guidelines of the standard or regulation that’s being assessed. 

Internal audits are done by staff or employees acting as internal auditors. Their role is to check the state of compliance and ensure the organization consistently follows the standard. 

Why are Compliance Audits Important?

Compliance audits serve a lot of purposes, like:

• They identify gaps. One of the objectives is to check whether the policies and processes are effective in meeting the compliance requirements. If there are noncompliances, the auditors will note them and report to the organization’s management or to the appropriate government agency.
• They help in improvement. Once gaps are uncovered, the organization can make improvements by implementing corrective and preventative actions. For example, penetration testing conducted as part of a cybersecurity audit could reveal that employees are susceptible to social engineering attacks, indicating a need for additional employee cybersecurity awareness training. ‍
• They reduce risks and pave the way for compliance for other frameworks. For instance, companies that comply with cybersecurity regulations and frameworks, such as the PCI DSS Compliance Framework, should perform well against cyber attacks and other threats. Likewise, companies in compliance with the EU’s General Data Protection Regulation (GDPR) are already compliant with many provisions of the newer California Consumer Privacy Act (CCPA). These organizations will also be well on their way to compliance as other states follow suit and enact similar laws. ‍
• They help avoid penalties or legal trouble. This one applies explicitly to mandatory laws, where noncompliance could easily get a company into serious trouble.

How to Prepare for a Compliance Audit

There’s no single description of how a compliance audit works, but there are common grounds.

First, your organization and your auditing company must set a schedule for the formal audit. On the day of, the auditors will review the documents, processes, and other proofs of compliance. A final report (which includes nonconformances and recommendations) is generated and then presented to your organization. Depending on the level of non-compliance, your organization could face penalties or be given a chance to fix the identified gaps. 

However, organizations shouldn’t rush towards a compliance audit. Preparation is vital if you want to pass. Here are a few tips on how to prepare for a compliance audit:

• Prepare the needed documents. The documents should define how the organization complies with the standard. Moreover, these documents should reflect actual practices that employees follow. As the saying goes, “write what you do and do what you write.” 
• Do an internal review first. A self-assessment should identify the gaps and improvement opportunities before the external audit. For instance, in cybersecurity, reviewing IT systems is critical to make sure they do not violate any IT standards. 
• Have a clear audit trail. Audit trails are manual or electronic records that act as documentation and proof of compliance. If companies are not managing their audit trails well, there’s a high chance they’ll have problems with the auditors. Security policies and processes (like data retention and document control) play a significant role in managing audit trails. 
• Conduct training. Train staff or employees so that they know the policies and procedures they must follow. For example, if people are adequately trained in cybersecurity, they’ll know how to protect confidential information and identify cyber risks. Download our Cybersecurity Awareness Training Guide for valuable tips on training employees on password security best practices, identifying and preventing phishing attacks, and more.  ‍
• Stay up to date. Once you’ve learned that your competitor has been fined for a certain incident, use that opportunity to examine your own systems and make improvements. It’s also important to keep track of new or updated standards and regulations that apply to your organization.

Compliance Audits for SMBs

Just like large companies, small and medium-sized businesses (SMBs) are also responsible for meeting requirements for relevant compliance frameworks and benefit from the enhanced security posture that comes with compliance. 

However, SMBs typically only have a small team of people that focus on compliance activities. If they are just starting or relatively inexperienced, preparing for and passing compliance audits may prove to be complicated. 

Zeguro offers a suite of cybersecurity tools to help SMBs manage risk and accelerate compliance for frameworks such as SOC 2, PCI DSS, and more. Contact us to learn more about our Cyber Safety solution and how we can help you in your compliance journey, or sign up for a free trial and get started today.