HR AUDIT FRAME WORK

HR Analytics-IIM Rohtak

OCTOBER 31, 2021

Contents

Overview:...............................................................................................................................................2
Background:.....................................................................................................................................2
Types of HR Audits:......................................................................................................................2
Purpose of HR Audit:....................................................................................................................3
Scope of HR Audit:........................................................................................................................3
Frequency of HR Audit:...............................................................................................................3
HR Audit Methods:.........................................................................................................................4
SOP of HR Audit:.............................................................................................................................4

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Overview:
Human resource audits can help identify whether an HR department's specific practice areas or
processes are adequate, legal and effective. The results obtained from this review can help
identify gaps in HR practices, and HR can then prioritize these gaps in an effort to minimize
lawsuits or regulatory violations, as well as to achieve and maintain world-class competitiveness
in key HR practice areas.

Background:
Human resource audits are a vital means of avoiding legal and regulatory liability that may arise
from an organization's HR policies and practices. In addition to identifying areas of legal risk,
audits are often designed to provide a company with information about the competitiveness of
its HR strategies by looking at the best practices of other employers in its industry. In essence,
an HR audit involves identifying issues and finding solutions to problems before they become
unmanageable. It is an opportunity to assess what an organization is doing right, as well as how
things might be done differently, more efficiently or at a reduced cost.
HR usually conducts an audit by using a questionnaire that asks for the evaluation of specific
practice areas. This document helps guide the audit team in scrutinizing all critical areas of an
organization's HR practices. The audit may also include interviewing or using questionnaires to
solicit feedback from selected HR employees and other department managers to learn whether
certain policies and procedures are understood, practiced and accepted.

Types of HR Audits:
An HR audit can be structured to be either comprehensive or specifically focused, within the
constraints of time, budgets and staff. There are several types of audits, and each is designed
to accomplish different objectives. Some of the more common types are:

Type of HR
Audit

Compliance Best Function Internal External

Strategic
Audit Practices Specific Audit Audit
 Compliance. Focuses on how well the organization is complying with current federal,
state, and local laws and regulations.

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  Best practices. Helps the organization maintain or improve a competitive advantage by
comparing its practices with those of companies identified as having exceptional HR
practices.
 Strategic. Focuses on strengths and weaknesses of systems and processes to
determine whether they align with the HR department's and the organization's strategic
plan. 
 Function-specific. Focuses on a specific area in the HR function (e.g., payroll,
performance management, records retention).
 Internal Audit. Focuses on reviewing HR process internally based on the existing HR
policies & procedures.
 External Audit. External firm/ auditors are invited to review the existing practices,
policies and procedure of department, wherein auditor review and based on their

Purpose of HR Audit:
Purpose of HR audit is to check the pulse of HR department what they are clamming and what
actually they are doing, by doing this organization mitigate people & process related potential
risk or assess the effectiveness of all HR functions.

Scope of HR Audit:
This audit will cover following areas:

 Will cover HR processes and its effectiveness audit, will cover Talent Acquisition,
Onboarding, Personal Files, HRMIS Induction & orientation, Compensation & Benefits,
Performance Management, Training & Development, Employee Health & Welfare
initiatives, HR Policies, Disciplinary Procedures, Grievance Redressal Mechanism etc.
 Will cover HR Payroll and Compliances.
 Work place or Cultural or employee satisfaction audit.
 Modify and Review HR system & challenges or strategic HR audit.

Frequency of HR Audit:

Frequency of audit can be as follows:

 Quarterly
 Half yearly
 Yearly
It’s best to have internal audit quarterly, external audit half yearly and compliances, strategic,
cultural audit yearly.

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HR Audit Methods:
HR Audit
Methods

Individual Group Questionnaire Observation Analysis of

Interview Interview Method Method secondary data

SOP of HR Audit:

Communication of Audit
schedule, purpose, scope,
guidelines and checklist , if
any

Submiting NC /
Obsservation/ SI closer
target report. Pre Audit Meeting-
Introduction of Auditee &
Closing audit points & Auditor and explaning the
submiting closer report to objective of audit
auditor and verfying the
closer points with audiot.

HR Audit

Preparing final audit Meeting of Audior with

report and submitng to Auditee and accessing
management. specified audit area.
Closer Meeting with End of meeting sharing
auditees in presence of audit findings with
management & briefying auditee.
on all audit observations

Preparing audit finding

report, handing over
finding report to auditee
and taking their
acknowledgement.

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