Human Resources Internal Audit

By failing to evaluate Human Resources performance over its areas of management, a company runs the risk of noncompliance with employment and labor laws as well as lawsuits from individuals. Human Resources covers a wide variety of workforce activities, including employment law issues, compensation and benefit plan design, employee hiring and termination procedures and the handling or administrating of many corporate policies.  Some of the new issues involving HR are management ethics, increasing healthcare costs, knowledge retention as baby boomers retire, and succession planning. HR keeps companies in compliance with the government on Family Medical Leave Act, at-will employment, immigration, Fair Credit Reporting Act, discrimination, harassment, COBRA, HIPAA and many others.  Audits of the entire HR area or just elements within HR can save a company embarrassment, bad public relations, fines and penalties.  

Questions to consider:

On Human Resources - Are there written procedures on interviewing candidates?  There are certain questions that you cannot ask in an interview, does your company know which ones?  Are best practices used in the hiring process?  Are background checks performed?  Is the HR staff adequately trained?  There are certain positions that need certification and special training.  Is there an orientation program for new hires?  Is there a code of conduct or business ethics policy?  Decosimo can audit and evaluate existing policies or help write policies not currently in existence.

On Policies - Some companies have hundreds of policies and procedures with HR serving as the administrator.  Does your company have a sexual harassment policy?  Many companies have adopted a harassment policy which also includes other protected characteristics.  Are there termination procedures, including the use of a checklist, to avoid missing a step such as terminating access to the company’s network?  Is there a Code of Business Conduct and/or Conflict of interest Policy?  Many HR departments are in charge of having employees sign acknowledgement forms on certain policies on an annual basis to document and educate personnel on what is expected.  We have audited these areas to ascertain that individuals have been educated on a given policy and signed the acknowledgement form.

On Regulatory – Is your company in compliance with HIPPA guidelines?  Does your company have concerns with safety issues regarding OSHA? The department of labor has many regulations to follow; does your HR department have someone that is knowledgeable in this area to mitigate risk of noncompliance?   

We Can Help

When you need to review your company's human resource policies and procedures, contact Decosimo's internal audit team and ask us how we can help. Our internal audit team has the experience and credentials to assist you with establishing controls and generating HR best practices. 

Decosimo’s internal audit team has provided internal audit advisory services to existing internal audit departments of financial institutions, utility and manufacturing companies. Our internal audit team consists of Certified Public Accountants and Certified Fraud Examiners. Our internal audit services management team has over 30 years of experience creating and managing internal audit departments for public and private clients in industries including, manufacturing, retail, energy, healthcare, and the restaurant and entertainment fields. 

To get started, ask about our half day, no charge, “Walk and Talk.”

Examples of Human Resources Findings

• Client dismissed employee and did not change the locks to which the ex-employee had access. A large amount of inventory disappeared.  We discovered that the individual went to work for a competitor and, most likely, sold the inventory to the competitor.  We created and implemented procedures (checklist) for terminated employees, including change of locks, passwords and PIN's.
• A review of hiring practices discovered many questions asked on the application and during the interview that could have led to a discrimination lawsuit.  We helped revamp the interview process and application form.
• A company was self-insured and never performed an analysis on obtaining unemployment insurance versus what they were currently paying because of being self-insured.  An annual comparison showed it was time to switch to save the company money.
• We have assisted in updating and rewriting many HR policies such as the Business Code of Conduct and Ethics Policy, Harassment Policy and Whistleblower Policy.  Policies help guide employees on what is expected of them by management and can aid in lawsuits.