Ensuring compliance with a compliance checklist is the easiest way to maintain a sustainable and ethical business. The landscape of compliance can be daunting, with myriad laws and regulations to adhere to. From safeguarding team member rights to securing sensitive data, the stakes are high. Navigating this complex terrain requires a robust compliance strategy, one that not only meets legal requirements but also fosters a culture of accountability and excellence.

In this guide, you’ll find the ultimate compliance checklist designed to simplify and streamline your audit process. We’ll walk you through the essential steps to conducting a thorough compliance audit, covering everything from labor laws and health and safety regulations to data security and corporate governance. By following this comprehensive checklist, you’ll ensure your organization remains compliant, mitigates risks, and maintains its stellar reputation.

Ready to elevate your compliance game? Let’s dive in and equip your business with the tools and knowledge your team needs to stay ahead of the game.

Understanding Compliance Audits

A compliance audit is an inspection of an organization’s adherence to regulatory guidelines, industry standards, and internal policies. Its primary purpose is to ensure that the organization operates within the legal framework, maintains high ethical standards, and mitigates risks associated with non-compliance. By identifying gaps, weaknesses, and areas for improvement, compliance audits help organizations avoid legal penalties, enhance operational efficiency, and uphold their reputation.

According to OSHA ⁽¹⁾, the five most frequently violated standards are:

1. Fall Protection (where the construction industry is the top for non-compliance).
2. Hazard Communication (non-compliance found in the general industry).
3. Ladder Safety (again, in the construction industry, where the majority of non-compliance occurs).
4. Respiratory Protection (non-compliance found in the general industry).
5. Scaffolding Inspection & Safety (the construction industry again takes the lead in non-compliance with OSHA standards).

There are many types of compliance audits that focus on specific elements such as regulatory, policy, and industry standards compliance. However, if we really want a bird’s eye view, we can segregate compliance audits into two basic categories: internal and external.

Internal Compliance Audit

An internal compliance audit is a form of preventive audit in which an organization self-assesses to ensure compliance with the chosen regulations or standards. Its primary focus is to evaluate the company’s adherence to internal policies and procedures and compliance with regulatory requirements from within. This type of audit helps identify and rectify potential issues before they become significant problems and ensures ongoing adherence to internal controls and standards.

External Compliance Audit

An independent third-party auditor performs an external compliance audit. This audit aims to provide an unbiased assessment of the organization’s compliance with external regulatory requirements, industry standards, and legal obligations. Due to their impartial nature, external audits often carry more weight with stakeholders, investors, and regulatory bodies. They help validate the organization’s compliance status and can uncover issues that internal auditors might overlook due to familiarity or bias.

Critical Steps to Conducting a Compliance Audit (Use a Compliance Checklist)

There are four primary stages or steps to conducting an internal or external compliance audit:

1. Preparation Phase:
   1. Notify Stakeholders of the Audit – Ensure all stakeholders and team members whose work or department is directly affected receive a pre-audit notification, making them aware of the audit and its importance.
   2. Select the Audit Team and Define Roles – Choose appropriately trained personnel for the audit team and clearly define their responsibilities for the audit.
   3. Gather Documents – Collect and cross-reference any regulations, standards, or KPIs with the audit checklist to ensure all relevant topics are covered.
   4. Set a Timeline – Schedule the audit with stakeholders and the audit team, establishing clear deadlines.
   5. Create a Practical Audit Plan – Complete any further planning to ensure the audit plan aligns with organizational policies.
   6. Develop a Compliance Audit Checklist—Create the compliance audit checklist based on the documentation gathered and necessary KPIs for a comprehensive audit.
2. Audit Phase:
   1. Hold an Opening Meeting – Conduct an initial meeting with your audit team and any relevant stakeholders to discuss primary objectives, expectations, and the overall audit process.
   2. Conduct the Audit – Perform the audit according to the prepared compliance audit checklist, plan, and timeline, systematically evaluating each area for adherence to regulations, standards, and internal policies.
   3. Hold an Audit Team Meeting – Convene the audit team to discuss findings, suggest solutions for identified issues, and recommend measures for achieving full compliance.
   4. Hold a Closing Meeting – Organize a final meeting to present a summary of the audit, discuss key findings, answer any questions, and thank all participants and stakeholders for their cooperation.
3. Reporting Phase:
   1. Write and Distribute the Audit Report—Prepare the audit report, ensuring it is clear and comprehensive. Then, distribute the report to relevant managers, stakeholders, and the audit team.
   2. Summarize Findings and Recommendations – Provide a concise summary report of the audit findings and offer actionable recommendations to address any issues and enhance compliance.
4. Follow-Up Phase:
   1. Implement Corrective Actions—Take action to address and resolve the issues identified in the audit. Ensure all corrective measures are effectively implemented.
   2. Schedule Regular Monitoring and Follow-Up Audits – Plan and schedule ongoing monitoring and follow-up audits to ensure continuous compliance and to verify that corrective actions have been successful.

Types of Compliance Audits

There are many different types and forms of compliance audits. Below are examples of some of the most common types, along with a brief description of each type.

General Compliance Audits

• Legal Compliance: This audit ensures that the organization adheres to all applicable laws and regulations, prevents legal penalties, and maintains ethical standards.
• Labor Laws: This audit evaluates the company’s compliance with employment regulations, including non-discriminatory practices, fair wages, and working conditions.
• Health and Safety: Assesses workplace conditions to ensure they meet safety regulations, protecting employees from hazards and reducing liability risks.
• Corporate Governance: This audit type reviews the organization’s governance practices to ensure transparency, accountability, and compliance with corporate laws and investor expectations.
• Data Security: This audit checks the measures in place to protect sensitive information, ensure compliance with data privacy laws, and prevent breaches.
• NAR Compliance: Ensures adherence to the National Association of Realtors’ standards and ethics, promoting professionalism and integrity in the real estate industry.

Resources

• Ensuring Safety and Compliance in Field Operations through Digital Tools
• Mobile Reporting for Industry Compliance: Navigate Regulatory Requirements
• How to Scale Safety Compliance Across Multiple Locations
• A Guide To NAR Compliance (And 3 Tips For Your Realty Team)

Industry-Specific Audits

• HIPAA Compliance: Verifies that healthcare organizations protect patient information and adhere to regulations stated in the Health Insurance Portability and Accountability Act.
• ISO Compliance: Confirms adherence to internationally recognized standards, such as ISO 45001 for occupational health and safety.
• GDPR Compliance: Ensures that organizations follow the European Union’s General Data Protection Regulation, safeguarding data privacy and security.
• GMP Compliance: Evaluates manufacturing processes to ensure they meet Good Manufacturing Practices, maintaining product quality and safety.
• GDP Compliance: Assesses compliance with EU Good Distribution Practices, ensuring the quality and integrity of products throughout the supply chain.
• OSHA—PPE Compliance: This audit examines the use and maintenance of Personal Protective Equipment to ensure compliance with OSHA safety standards.
• Housekeeping Compliance: This audit reviews workplace cleanliness and hygiene practices, which are crucial for industries like pharmaceuticals and food manufacturing to prevent contamination.

Resources

• How To Perform A GMP Audit (In 8 Easy Steps)
• The GMP Audit Checklist Pharmaceutical Industry Should Be Using
• A Food GMP Audit Checklist (You Can Download Free)
• A GMP Audit Checklist For Cosmetics Industry Leaders
• GMP Vs. CGMP Explained (And Amazing Tips To Manage Them)
• Complete Industry PPE Guide (Personal Protective Equipment)

Benefits of Compliance Audits

Completing an internal or external compliance audit has a number of benefits. First and foremost, compliance audits help organizations maintain appropriate operations and prevent challenges incurred by neglecting compliance (such as work stoppages or fines). Further to this obvious benefit, compliance audits also show team members that your organization cares about maintaining safe and regulatory-compliant operations. Regular compliance audits also help not only maintain good business relationships and reputation but also foster a culture of improvement, which can indirectly positively affect productivity.

Implementing an Effective Compliance Program

Although many industries (if not all industries) have various compliance requirements, studies show that work stress and job insecurity have a negative impact on safety compliance, especially in dangerous industries like mining. ⁽²⁾ For this reason alone, it is advisable to maintain a suitably positive work environment not only when implementing new compliance programs but also in day-to-day operations. A positive work environment will foster more effective compliance management. 

An effective compliance program is necessary for successful operations in more than just industries like mining. It is a necessity of every business and every industry, no matter the field or scope of operations. However, if not implemented correctly, a compliance audit program can slow or stall operations. For that reason, it is advisable to have an appropriate plan first.

Second on the compliance program implementation is ensuring that you implement regular training and awareness programs with your team members and stakeholders. I recommend implementing a feedback mechanism whereby those involved or affected can make suggestions that help you better manage the compliance process.

Studies have shown that small and medium-sized organizations have the most significant challenges when developing and maintaining worksite health and safety compliance programs. ⁽³⁾ 

However, these programs are critical in an organization’s attempt to maintain compliance with worker health and safety regulations. This fact is a crucial indicator of the importance of planning and training within small and medium-sized companies.

The third recommendation I have for implementing an effective compliance program is to ensure that you have integrated an audit documentation system that works effectively for your team members and management. Here is where the 1st Reporting application comes into play. 

The 1st Reporting app is a mobile application designed to streamline field and in-facility operations by facilitating real-time incident reporting, safety inspections, and compliance audits. It offers features such as customizable forms, automated workflows, and instant data sharing, making it an invaluable tool for maintaining and managing effective compliance programs. By using the 1st Reporting app, organizations like yours can quickly identify and address compliance issues, ensure accurate record-keeping, and enhance overall safety and regulatory adherence.

Enhancing Compliance and Building a Robust Future

Regular compliance audits are essential to identifying and rectifying potential issues, ensuring ongoing adherence to regulations, and fostering a culture of continuous improvement. Utilizing tools like the 1st Reporting app can significantly enhance your compliance program by streamlining incident reporting, safety inspections, and audit processes, making it easier to maintain accurate records and swiftly address any compliance gaps.

As you integrate these practices into your operations, you’ll not only mitigate risks and avoid penalties but also build a more vital, more resilient organization that stands out for its commitment to safety, integrity, and excellence. Embrace the journey of compliance as a cornerstone of your business strategy, and watch your organization thrive in a landscape where accountability and adherence to standards set the stage for lasting success.

Article Sources

1. “Commonly Used Statistics | Occupational Safety and Health Administration.” 2023. Osha.gov. 2023. https://www.osha.gov/data/commonstats.
2. Masia, Uanda, and Jaco Pienaar. 2024. “Unravelling Safety Compliance in the Mining Industry: Examining the Role of Work Stress, Job Insecurity, Satisfaction and Commitment as Antecedents.” SA Journal of Industrial Psychology 37 (1): 01-10. https://www.scielo.org.za/scielo.php?pid=S2071-07632011000100018&script=sci_arttext.
3. Stokols, Daniel, Shari McMahan, H.C Clitheroe, and Meredith Wells. 2001. “Enhancing Corporate Compliance with Worksite Safety and Health Legislation.” Journal of Safety Research 32 (4): 441–63. https://doi.org/10.1016/s0022-4375(01)00063-9.