All About Compliance Audits: How to Avoid a Penalty


The purpose of a compliance audit is to ensure that the business operates in compliance with laws, regulations, and other standards. The most common type of audits is those performed by regulatory agencies.

These may include federal agencies such as the EEOC or FDA. As well as state or provincial regulators. But also international organizations such as ISO 9000 or AIA.

Private sector auditors seeking certification for their product lines (e.g., UL) are included too. Compliance audits can be time-consuming and costly. But they can also help your business avoid penalties. Consequently, reduce risks associated with noncompliance.

This article will cover everything you need to know to be compliant to the extent possible. Whenever you’re ready to learn, keep reading.

What Is Business Compliance?

Business compliance is the process of making sure that the company operates according to laws, regulations, and other standards. Regulatory agencies or private organizations may conduct many types of audits.

Businesses often take these compliance checks as an opportunity—an opportunity to make changes in their practices. Thus, so they can avoid penalties and risks associated with noncompliance.

The most common type is a regulatory audit, where regulators will inspect specific areas related to workplace safety, product quality, or environmental protection (among others).

Compliance auditing is time-consuming because it involves inspecting all business operations. If done right, it can help your business avoid penalties and risks.

The key is to plan. To have a good system for identifying compliance-related issues. This will help avoid surprises about the audit process. Allowing you to find solutions more quickly than if you were caught off guard.

Every company should be on alert when invited by regulators or inspectors. This could mean that their practices are being audited!

How do I prepare for my next regulatory inspection? It all starts with knowing which areas of your workplace need regulation checks. Y

ou might also want to take stock of any paperwork related to these departments. As well as those employees who work there. Make sure safety equipment is up-to-date; and review policies about visitor access.

It’s a good idea to use the time between inspections as an opportunity to improve your workplace. Focus on areas that need improvement. Update any paperwork that could be outdated. That way, you’ll have all of this for when inspectors do come back!

The First Business Regulations

The first regulation in the world of business ever to be implemented was in Ancient Rome. It required businesses to comply with regulations certainly if they wanted their goods traded at port cities.

Before this time, there were no standards for how businesses should operate or who could do it. But then countries began creating legislation that would set these standards and establish new trade rules.

Today, each country has some form of regulatory legislation enacted. This shows how far-reaching such requirements are. “Enacted is the term here. We need to be careful with our verbs.”

Many of these regulations are enforced by a government. This, meaning that they will take legal action against those who do not follow them.

In other words, if you don’t comply with certain business regulation requirements, then you may end up getting penalized. This can come at a high cost to your company’s reputation and finances.

Types of Regulations In Business

The primary regulatory bodies in business create guidelines for businesses to follow. For instance, some types of regulations include:

Occupational Safety and Health Administration (OSHA)

OSHA regulates safety standards concerning work conditions. Examples are temperature extremes, noise levels, sanitation practices, toxic substances, and more.

OSHA also helps provide workplaces that are meant to be free from hazards, develop notices for employee safety and abate hazardous conditions.

The National Labor Relations Board (NLRB)

This ensures employees have rights about unions and collective bargaining agreements. It also protects against unfair labor practices like discrimination or coercion.

Equal Employment Opportunity Commission (EEOC)

EEOC monitors employers who may discriminate by race/ethnicity, color/national origin. But also by religion/creed, sex/gender identity.

Also, Title 7 prohibits decisions upon employment based on assumptions or stereotypes of traits, abilities, and individual performance from a racial perspective.

Bureau of Labor Statistics (BLS)

The BLS publishes data on employment, prices, production, income/wealth. As well as consumer spending, international trade/balance of payments.

They measure the productivity within the US economy, which leads to support in all private and public decision-making.

Environmental Protection Agency (EPA)

The EPA began gathering data on the disposition and generation of waste in the continental US about 30+ years ago.

EPA oversees environmental regulations that protect human health. But they also oversee the environment, including wildlife protection.

Department of Agriculture (USDA)

USDA issues guidelines and standards in regards to sanitary methods when handling food products. They also monitor how agricultural practices affect natural resources, such as soil conservation or water quality.

Department of Energy (DOE)

DOE researches sustainable alternatives to energy sources like coal or oil. They are also providing oversight on how our current energy infrastructure can be upgraded.

Federal Trade Commission (FTC)

FTC regulates unfair and deceptive practices in the marketplace. These include labeling and advertising of products.

However, the FTC also attempts to maintain competition for the purpose of marketplace freedom from anticompetitive practices, mergers, and policies.

National Labor Relations Board(NLRB)

NLRB has jurisdiction over a wide variety of labor disputes. Examples are the unfair treatment of workers, access to union organizing activities, among others.

They also have oversight on collective bargaining agreements. Primarily, those to be negotiated between employers and unions representing employees. Be compliant, don’t miss out on the simple process of learning and implementing new practices.

Why Is Compliance In Business Important?

Compliance in business is important because cause it helps to be in line with the law. It’s also important because if you get a penalty, you’ll have some time and money to fix any problems before they become unmanageable. That way, you can avoid penalties down the line!

If a business is non-compliant, it might face penalties from a regulatory body. This might be the Department of Labor, Environmental Protection Agency, or other governmental agencies. Penalties can be costly and time-consuming to fix, so it’s best to avoid them by staying compliant!

Businesses are usually required to have a compliance plan in place to stay on track with all regulations. If you’re not sure how your company stacks up against these laws, don’t worry – there is help out there for you!

There are many resources available through websites like Small Business Association. They have information about what businesses need for due diligence on an annual basis.

They also have employee training programs that cover important topics. For instance, harassment prevention or chemical safety can go a long way.

Specifically, towards helping employers reduce risk exposure as well as meeting regulatory requirements. The key is to stay on top of updated regulations and train your employees.

If you work with contractors or temporary employees, you must ensure that they also understand their side of the compliance equation. If they breach your regulations, you might be held accountable for their faults. This is not something you want to happen because it can happen without you ever knowing about it.

How to Avoid Penalties?

To avoid penalties for being non-compliant in business, the company must ensure compliance with all applicable laws. This includes understanding and meeting regulatory requirements. As well as following best practices for maintaining a healthy workplace culture.

A company can train its employees on important topics. Topics could harassment prevention or chemical safety. This helps reduce risk exposure by complying with regulations.

In addition, the company must stay updated on new legislation. This is important to have an awareness of changes. Changes can directly affect their business operations in the future.

Stay Informed. Subscribe to newsletters from industry associations. Try out the American Society for Quality (ASQ), SHRM or ASMI

Join social media groups where you’re exposed to discussions about what’s trending in your profession. Don’t get blindsided by something when it becomes law! You could also try compliance auditing from Ice Cold Consulting.

That way, if compliance audits happen, companies have done their due diligence. They voided any penalty-related fines because they were up-to-date with all the regulations.

Business Content for You

Now that you understand how to be compliant and its importance, you are that much closer to finally managing your compliance. In any case, compliance is not an easy thing to achieve, especially if you’re starting.

Take your time, do your research, and integrate new practices slowly. Train your staff and educate new team members. Consult with specialists and avoid common compliance mistakes.

Another important thing to do is to contact your regulatory bodies that apply to your business. They will be able to provide the latest information on everything compliance-related.

If you’re interested in learning more about business in general, check out some of our other articles on the sidebar or down below. We host a variety of content for all levels of management and enthusiasts.

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