The first step of corporate growth is understanding your pitfalls. You must know your weak points to advance further ahead. So, it is essential to conduct a performance review to learn about the weak links in an organization.

In this regard, audits are an efficient way of doing so. They are an in-depth study of the business processes to understand its positives and negatives. It gives a fair idea of what needs to change. One such important audit in a company, among many others, is the HR Audit.

What is an HR Audit?

The HR (Human Resource) Audit is the process to evaluate a human resource department's performance. It examines various aspects of the HR tasks in a company. These can be policies, processes, procedures, documentation, and systems.

An HR Audit looks into the various fronts of human resource personnel's work in ascertaining these. Some of these are:

1. Hiring Procedure

1. Employee Onboarding

1. Compensation Plan

1. Benefits Package

1. Performance Review

1. Termination of Tenure

1. Exit Interview, etc
   

These sections form a crucial part of the HR functions in a company. Therefore, a study into these fronts gives a fair idea of the HR performance in the company.

Besides reviewing the HR professional's work, an HR audit also serves many other purposes. Here is a quick look at a few of these purposes.

Purpose of HR Audit

1. Ensuring compliance of the company's working with the governing laws

1. Helping the HR Department understand how to improve itself

1. Reviewing and the proper resource allocation for human resources

1. Being an act of "due diligence" for potential investors and stakeholders of a company

1. A basis for improvements in the future
   

These were some of the purposes for conducting an HR Audit. However, based on the different purposes, there are also different HR Audit types to consider. Some of these are as follows.

Types of HR Audit

1. I-9 Audit

These audits take place to ensure that there is an I-9 form for all employees in the company. The I-9 form is a legal requirement for companies to verify that all workers have valid employment authorization. This step is a must for employment in the United States of America.

An I-9 Audit checks for any mistakes in the filling procedure of this form. It also looks into the need for further documentation in the future.

2. Policies

An audit on policies reviews the company's current and upcoming policies to ensure consistency. Policy audits are also necessary to ensure that they fully comply with the governing legal norms.

3. Legal Compliance Audit

Compliance Audits ensure that the company's practices comply with all employment laws. These audits look into the leave structure, disability structure, health and safety, hr policies, payroll, etc.

4. Departmental

This kind of audit specifies all its efforts in one department. It can be payroll, benefits, performance, etc. Departmental audit keeps on changing departments to review different divisions of a company.

5. Salary and Working Hours

This audit looks into uncovering mistakes in the company's salary structure and working hours for its workers. It reviews the legal working hours for everyone, salary computations, overtime compensation calculations, etc.

6. Safety

A safety audit looks into the steps necessary to ensure employee health. While working onsite or even at the office, a worker may be vulnerable to many aspects challenging its health. This audit makes sure that a company does everything possible to limit risk in the workplace.

7. Hiring

As the name suggests, a hiring audit reviews a company's hiring process. It ensures that the hiring strategies are consistent, effective, efficient, and fair.

8. Employee Training

This audit checks up on the company's employee training and development programs. It identifies where new training programs are necessary and how to improve the old ones.

9. Benefits & Compensation Package

A benefits & compensation package audit checks the salary and benefits package. This audit looks upon minimum wage, compensation as per the company's objectives, appropriate employee benefits, etc.

These were a few HR Audits that a company must undertake to review its legal standpoint and performance. 

Created & Posted by Pooja

Income Tax Expert at TAXAJ

 

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