Compliance Audit

A compliance audit is a type of audit that checks against internal policies and procedures of the entity as well as the law and regulation where the entity is operating in. Law and regulation here refer to the government’s law where the business is operating.

Compliance audit is a comprehensive review of some aspect of the internal operations of company that requires certification by a regulatory body to verify that it is in compliance with mandatory guidelines. Compliance audit procedures may be conducted internally, but are usually facilitated by the certifying organization. A company may require several compliance audits to review regulatory adherence in multiple departments, such as finance, IT, manufacturing, human resources, and, in the case of certain types of financial firms, marketing and sales.

For example, in the banking sector, there are many kinds of regulations required by bankers to follow and comply with.Most of the central banks require commercial banks to set up the complaint review (assessment) or compliance audit to make sure that they are complying with those laws and regulations set.

The entity may also assign its internal audit functions to review whether the entity’s internal policies and procedures are complying and effectively being followed.

A compliance audit is part of the system that is used by the entity’s management to enforce the effectiveness of the implementation of the government’s law and regulation, and the entity’s internal policies and procedures.