Policy & procedure compliance audits

A policy and procedure compliance audit is a formal review to determine if an organization's written policies, procedures, controls, and practices align with applicable laws, regulations, and internal standards.

These audits are necessary due to triggers like regulatory requirements, contractual obligations, suspected gaps, pre-investment due diligence, or a periodic risk-based schedule. The audit process involves several key steps:

Plan & Scope

Define clear objectives and scope, engaging key stakeholders like compliance, IT, finance, and leadership. This involves mapping applicable regulations and frameworks by industry and state, and using risk assessments and regulatory mandates to shape the scope.

Gather Documentation

Collect internal policies, documentation, and control implementation details.

Gap Analysis

Compare existing controls, processes, and procedures against in-scope requirements to identify gaps.

Testing & Evidence Collection

Evaluate current processes and collect evidence.

Findings, Risk-Rating, and Prioritization

Document findings, assess risks, and prioritize corrective actions.

Remediation Planning

Develop remediation plans with assigned owners and timelines.

Follow-up Validation and Reporting

Verify fixes and report to leadership.

Continuous Monitoring & Scheduled Re-audits

Implement ongoing monitoring and schedule regular re-audits. Sample checklist topics include policy currency, delegation of authority, record retention, incident response, privacy notices, employee training records, wage/hour records, safety logs, vendor contracts, access control lists, data flows and encryption, and consent mechanisms. Audits should be conducted on a risk-based schedule, with annual full program reviews and more frequent checks for high-risk areas or after regulatory/operational changes. Remediation best practices involve prioritizing by risk, assigning owners and deadlines, documenting evidence, communicating status, and validating fixes. Federal and state enforcement trends include fines, civil penalties, litigation risk, and reputational harm, though self-audit and voluntary correction programs (e.g., DOL/WHD) can offer mitigation paths. State-specific highlights for US business owners and LLC founders: California: Focus on CCPA/CPRA obligations, including consumer rights, notices, verification, opt-out mechanisms, and evolving CPPA regulations. Businesses meeting thresholds (e.g., $25M revenue or 100k consumers) must ensure privacy notices, request-handling procedures, and data inventories are in place. New York: Address SHIELD Act data-security requirements, NY labor law, and NYC local employment mandates (e.g., harassment prevention, scheduling/pay rules). Include data security program elements and breach-notification practices. Illinois: Be aware of BIPA requirements for biometric consent, storage, and retention, especially for apps and timekeeping systems using biometrics. Texas & Florida: Comply with state employer obligations (wage laws, posting requirements, EEO postings, state workplace safety guidance) and monitor municipal/local rules for specific training or disclosure requirements. Practical templates and resources can include audit scoping checklists, sample evidence request lists, finding templates, internal report templates, sample employee notification language for policy updates, and training matrix templates. Maintaining training logs, retention schedules, and evidence for auditors is crucial. Vendor/third-party considerations involve due diligence, contract clauses, flow-down obligations, and periodic vendor control testing. Authoritative resources from federal/state official pages and vendor guidance should be linked.