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Global Payment and Compliance
This guide will explore practical tips and practices for preparing and surviving regulatory inspections.....
Compliance audits are crucial for most businesses, from healthcare and manufacturing to finance, among other sectors. Usually, it helps organizations uphold regulatory standards while enhancing product/service quality, safety, and operational efficiency. More importantly, compliance audits play a significant role in promoting risk management and building a good reputation for a business among stakeholders.
Regulatory inspections often require preparedness and understanding of how to navigate the process. However, it can be a daunting process for many. This guide will explore practical tips and practices for preparing and surviving regulatory inspections.
A compliance audit is a comprehensive and independent evaluation process conducted to ensure an organization adheres to regulatory standards, guidelines, necessary industry standards, and internal policies. Unlike most audits, compliance audits are conducted externally (often by regulatory bodies) and may vary depending on whether an organization is a private or public company and its industry. More importantly, audits may provide recommendations on ways to make improvements and prevent future non-compliance in an organization.
Here are several significant practices essential to accomplish before a compliance audit starts.
An organization must have extensive knowledge of the regulations governing their industry. Above all, reviewing regulations/policies and staying updated is essential.
To be well prepared for regulatory inspections, an organization ought to know the kind of compliance audit they expect to take place. It also implies that there needs to be a checklist of necessary documents or electronic files to be reviewed during the audit (regulatory inspectors will request such documents). Ensure such documents/files are well organized prior to the actual inspection.
Some other practices/tips could help an organization prepare for compliance audits. They include:
a) Consult with compliance experts
It’s good for an organization to engage compliance/legal experts within their industry to help them gain insights into their compliance status and identify areas of improvement before the audit date.
b) Conduct an internal audit before the actual regulatory inspection
Organizations need to make a plan to conduct an internal audit. It also helps identify and address potential compliance issues before a regulatory inspection is done. However, ensure that such an audit covers all aspects likely to be scrutinized during the inspection. More importantly, take corrective measures to address noted compliance issues.
c) Designate an inspection team
Often, regulatory inspectors will need to interact with personnel from the organization during the auditing process. For this reason, you’ll need to form a team and assign each member relevant roles. Above all, they need training on approaching the auditing process and responsibilities. Briefly, the goal is to have a knowledgeable team to facilitate a smooth auditing process and know how to respond to questions/requests that arise.
d) Review previous audits
Reviewing previous audit reports provides valuable insights into potential areas of non-compliance during preparation.
e) Inform/notify relevant parties
Preparation also entails informing employees, subcontractors, and stakeholders about the compliance audit.
Here are the best practices once regulatory officers are on-site for an audit:
It’s good to prepare a small workspace that the visiting team of compliance inspectors can utilize for their work. It shouldn’t necessarily be an office, but having a comfortable and quiet room is good.
Communicating with the regulatory team is vital for a smooth and successful inspection exercise. It’s best to have a designated contact person from the organization’s team to facilitate communication and coordination with the external audit team during the visit. It’s good to take a professional approach in all communication.
The organization’s team needs to stay calm and cooperate during the audit session. It helps maintain professionalism and could positively influence auditors’ perception of your organization. Other things to observe include avoiding elaborating things outside of the question asked or outside of your expertise. Most of all, be transparent and provide auditors with the documents they request (particularly those within the audit scope).
A close-out meeting allows the auditor and the organization being audited to review and discuss the preliminary findings of the completed audit. Also, it’s an excellent opportunity to show appreciation for everyone’s time and cooperation throughout the audit session. More importantly, representatives of the organization being audited get to agree on a corrective action plan for identified non-compliance deficiencies. You also get to receive the compliance audit report.
Start by conducting a post-audit review with your internal team to assess the effectiveness of your compliance framework. It also helps evaluate how the audit process was conducted and identify areas of improvement.
The next step entails using the audit compliance report to create an effective action plan to address noted deficiencies. Overall, this approach should help an organization improve its compliance.
For a long time, compliance has been a necessity in some industries. However, in today’s world, nearly all industries have set regulations and standards they have to follow. Also, compliance audits are mandatory for most businesses. Therefore, organizations need to prepare for regulatory inspections in the best way possible, as discussed above.
For instance, stay updated with compliance requirements and align your compliance framework appropriately. Before the actual audit date, engaging compliance experts, conducting an internal audit, and organizing all the necessary compliance documents is necessary. During the inspection session, ensure there is communication and cooperation.
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