A compliance audit may be defined as a systematic, documented, internal or third-party process of ensuring conformity to relevant business operation and transaction policies, procedures, laws, and regulations.
Key Features of Compliance Audit
- Auditors evaluate the effectiveness of compliance management programs and internal controls
- They examine evidence to determine the extent to which established standards and mandates have been satisfied
- Audit results are communicated with recommendations for improvement to strengthen conformance
Example of Compliance Audit
A financial firm arrange periodic reviews of anti-money laundering protocols to ensure KYC checks, transaction monitoring and reporting systems were functioning as prescribed to maintain their high-risk client onboarding license.
Key Takeaways
Compliance audits represent a prudent approach for organizations to independently validate conformity and identify compliance gaps requiring remediation, thereby minimizing regulatory penalties and reputational risks stemming from non-adherence over time.