Overview: When it comes to risk and HR management, HR professionals should not simply wait for the Department of Labor (DOL), the Office of Federal Contract Compliance Programs (OFCCP) or another government agency to come calling. Periodic internal audits are the best way to ward off potential employment claims, adverse DOL findings, or an OFCCP audit in the case of a federal contractor.
HR audits can help an employer ensure compliance with applicable laws and to monitor its recordkeeping policies. To conduct an internal audit, HR should review employee time records, payroll records, personnel records and I-9 forms. If HR determines that the employer must modify its business practices, reclassify employees or correct pay discrepancies based on the findings, HR should work with senior management and the employer's lawyers to implement the needed corrective actions.
Another purpose of internal audits is to help determine if record destruction timetables are being observed. Failing to consistently destroy documents on a routine basis is one of the biggest obstacles to an effective record retention policy. An internal audit lets the employer check for noncompliance and demonstrate to government agencies and the courts that the policy is being vigorously enforced and maintained.
Some employers hire external auditing firms to perform their audits. Even if an employer uses an external auditing firm, however, HR should perform a self-checkup prior to the firm beginning its audit. While the external auditor's findings will not result in fines or penalties, a negative report can still be embarrassing. Periodic data auditing is pivotal so that mistakes and their causes can be found and corrected before it is too late.
Author: Peggy Carter-Ward, Head of Content
Company restructures like mergers or acquisitions are a tremendous opportunity for HR professionals to really shine. HR needs to be proactive in preparing for the restructure and should take the lead in gathering information from both companies (or more) and conducting a comparison study or a "cultural compatibility assessment." The results of that study are so significant that they can affect the price of the acquisition, set the course of the new company's trajectory, or even raise issues that cancel a merger or acquisition altogether.
An employer may use this HR Self-Audit checklist to ward off adverse regulatory findings, costly employment claims and other similar issues. Internal self-audits should be performed routinely, but not less than once per calendar year.
This How To details the steps a prudent employer should take when responding to an audit by the US Department of Labor's Wage and Hour Division.
Employment glossary definition of Audit.