A PROJECT SYNOPSIS ON

“HUMAN RESOURCE AUDIT”

AT
HERITAGE FOODS IND LTD
Project Synopsis is submitted to
In partial fulfillment for the award of the degree of
“MASTER OF BUSINESS ADMINISTRATION”
(FINANCE)
Submitted by
AIRPULLA SRI RAMULU AARTHI
1189-20-672-025
Under the guidance of
-----------------------------
ASSOCIATE PROFESSOR

SARDAR PATEL COLLEGE

DEPARTMENT OF BUSINESS MANAGEMENT
(AFFILIATED TO OSMANIA UNIVERSITY)
PADMARAO NAGAR, SECUNDERABAD,
HYDERABAD – 500025,
TELANAGANA.
2020-2022
INTRODUCTION
Human Resource audit and functions have a far reaching impact on the employees morale

and performance, which in turn, affects the overall performance of the organization. This is

why they are claimed to be closely related to a business’s ‘balance scorecard’ through

“productivity, people, and processes” (Ulrich, ). Given its criticality, a regular assessment of

the HR function, like that of finance function, becomes essential for sustaining organizational

health and growth. The need for such assessment is even greater in today’s dynamic and, at

times, turbulent, environment, where human resource management needs continuous up-

gradation and re-alignment.

Moreover, with increased importance of the human contribution to organizations’

competitive advantage, especially in the knowledge driven economy, the human resource

function itself is under transformation. It is gradually moving from the role of a service

provider to that of a strategic business partner. In order to perform this emerging role

effectively, the HR function has to continually assess :

l Whether it is adding tangible value to the organization through its strategies,

policies, processes and practices;

l Whether it is doing so at a competitive cost; and

l Whether it is doing so in a manner that is satisfying to its people, acceptable to the

society and the law, and, from a long term perspective, sustainable.

Answers to all these questions need regular HR Audit.

Moreover, HR Audit becomes significantly critical in situations of Merger or Acquisition.

Often Human Resource is not even informed about such transactions till they are complete.

However, most often if mergers or acquisitions fail, it is due to the people related issues.

Consequently, it is important that managements spend adequate time and energy to learn

about the human resource component of the target company. An audit or due diligence prior

to the closure of the deal can have a direct impact on the success or failure of the acquisition.

Regulatory Compliance is another area of major concern for most organisations. With

increased judicial scrutiny and pressures for compliance with the statutory requirements of

the country, it has become vital that HR continually remains vigilant with respect to the legal

compliance. It must keep itself abreast with the new laws and regulations, ensure that they are

being followed and also eliminate the gaps between what it does and what it says, as that by

itself, carries legal liability.

An audit is a systematic and independent examination of books, accounts, statutory records,

documents and vouchers of an organization to ascertain how far the financial statements as

well as non-financial disclosures present a true and fair view of the concern. It also attempts

to ensure that the books of accounts are properly maintained by the concern as required by

law. Auditing has become such a ubiquitous phenomenon in the corporate and the public

sector that academics started identifying an "Audit Society". The auditor perceives and

recognizes the propositions before them for examination, obtains evidence, evaluates the

same and formulates an opinion on the basis of his judgment which is communicated through

their audit report.

Any subject matter may be audited. Auditing is a safeguard measure since ancient times

(Loeb & Shamoo,1989). Audits provide third party assurance to various stakeholders that the

subject matter is free from material misstatement. The term is most frequently applied to

audits of the financial information relating to a legal person. Other areas which are commonly
audited include: secretarial & compliance audit, internal controls, quality management,

project management, water management, and energy conservation.

As a result of an audit, stakeholders may effectively evaluate and improve the effectiveness

of risk management, control, and the governance process over the subject matter.

The word audit is derived from a Latin word "audire" which means "to hear". During the

medieval times when manual book-keeping was prevalent, auditors in Britain used to hear the

accounts read out for them and checked that the organisation's personnel were not negligent

or fraudulent. Moyer identified that the most important duty of the auditor was to detect

fraud. Chatfield documented that early United States auditing was viewed mainly as

verification of bookkeeping detail.

NEED OF THE STUDY

Human Resource auditand functions have a far reaching impact on the employees morale and

performance, which in turn, affects the overall performance of the organization. This is why

they are claimed to be closely related to a business’s ‘balance scorecard’ through

“productivity, people, and processes” (Ulrich, ). Given its criticality, a regular assessment of

the HR function, like that of finance function, becomes essential for sustaining organizational

health and growth. The need for such assessment is even greater in today’s dynamic and, at

times, turbulent, environment, where human resource management needs continuous up-

gradation and re-alignment.

THE SCOPE OF HR AUDIT

The HR audit usually covers three parameters, namely, the HR AUDIT and

practices, the HR professionals and the HR department.

With respect to each of these, the Audit tries to find out : l The

actual state;

The congruence between the desired/professed state and the actual state; l The

alignment with the overall organisational audit and goals; and l The compliance with

the laws and regulations.

Auditing HR Practices

All HR departments provide several services that may be clustered into six key

domains (Ulrich and Lake,1990), staffing, training and development, appraisal,

rewards, organization governance and communication. For each of these six domains,

Ulrich recommends four types of assessments.

What is a Human Resources audit? Why do one? How do we do it and what do we do after it

is done? This article will discuss the basic concepts and help you get organized to take on this

important and beneficial project.

 OBJECTIVES OF THE STUDY

After going through this unit, you should be able to:

 To review the performance of the Human Resource Department and its relative activities in order

to assess the effectiveness on the implementation of the various policies to realize the

Organizational goals. 

 To identify the gaps, lapses, irregularities, short-comings, in the implementation of the Policies,

procedures, practices, directives, of the Human Resource Department and to suggest remedial

actions.

 To know the factors which are detrimental to the non-implementation or wrong implementation

of the planned Programmes and activities.

 To suggest measures and corrective steps to rectify the mistakes, shortcomings if any, for future

guidance, and advise for effective performance of the work of the Human Resource Department.

 To evaluate the Personnel staff and employees with reference to the Performance Appraisal

Reports and suggest suitable recommendations for improving the efficiency of the employees.

 To evaluate the job chart of the Human Resource Managers, Executives, Administrative Officers,

Executive Officers, Recruitment Officers, whether they have implemented the directives and

guidelines for effective Management of the Human resources in their respective Departments. 
 RESEARCH METHODOLOGY OF THE STUDY:

The study is both descriptive and analytical in nature. It is a blend of primary data and secondary

data. The primary data has been collected personally by approaching the online share traders who

are engaged in share market. The data are collected with a carefully prepared questionnaire. The

secondary data has been collected from the books, journals and websites which deal with online

share trading.

Source of data

Primary Sources: The primary data was collected through structured unbiased questionnaire and

personal interviews of investors. For this purpose questionnaire included were both open ended

& close ended & multiple-choice questions.

Secondary method: The secondary data collection method includes:

 Websites

 Journals

 Text books

Method Used For Analysis of Study

The methodology used for this purpose is Survey and Questionnaire Method. It is a time

consuming and expensive method and requires more administrative planning and supervision.

It is also subjective to interviewer bias or distortion.

Sample Size: 100 respondents

Sampling Unit: Businessmen, Government Servant, Retired Individuals

Statistical Tools: MS-excel and pie and bar diagrams are used to analyze the data.
LIMITATIONS

 Identification of the contributions of HR department to the organization.

 Improvement of the professional image of the HR department.

 Encouragement of greater responsibility and professionalism among members of the

HR department.

 Clarification of the HR department's duties and responsibilities.

 Stimulation of uniformity of HR policies and practices.

 Finding critical personnel problems.

 Ensuring timely compliance with legal requirements.

 Reduction of HR costs through more effective personnel procedures.

 Creation of increased acceptance of the necessary changes in the HR department, and

 A thorough review of the department's information system.

 REVIEW OF LITERATURE

Concept of Human Resource Audit

The word “audit” comes from the Latin verb audire , which means, to listen. Listening

implies an attempt to know the state of the affairs as they exist and as they are expected/

promised to exist. Auditing as a formal process is rooted in this feature of listening.

Consequently, it is a diagnostic tool to gauge not only the current status of things but also the

gaps between the current status and the desired status in the area that is being audited.

Auditing has been a routine exercise in the area of finance, especially because it is a statutory

obligation. However, in case of Human Resource, there is no legal binding to adopt auditing.

Some of the companies nevertheless prefer to have Human Resource audits.

Like any audit, the Human Resource Audit is also a systematic formal process, which is

designed to examine the strategies, policies, procedures, documentation, structure, systems

and practices with respect to the organization’s human resource management. It

systematically and scientifically assesses the strengths, limitations, and developmental needs

of the existing human resources from the larger point of view of enhancing organisational

performance.

The human resource audit is based on the premise that human resource processes are dynamic

and must continually be redirected and revitalized to remain responsive to the ever changing

needs. Human Resource Audits are not routine practices aimed at problem solving. Instead of

directly solving problems, HR audits, like financial audits, help in providing insights into

possible causes for current and future problems.

The findings of these audits aid decision making in the organisation and are usually internal

documents that need not necessarily be shared with the public. Moreover, unlike Financial

Audits that are routine, regulated and standardised, Human Resource Audits are non-routine

and may be designed to cater to the unique needs of the organisation at a particular point in

time. These are in fact, studies of an unusual nature. The manner in which the Audit is

conducted could vary from self-directed surveys to interventions by outside consultants.

What Is A Human Resources Audit?

It is simple to define a Human Resources audit. The audit is a tool that we use to (i) measure

an employer's compliance with its legal obligations in managing its workforce and (ii) chart

any corrective actions that might be needed. Fortunately, it is relatively easy to perform an

audit, although it does require time and effort. We will discuss that a little later.

Why Do We Recommend That Employers Periodically Audit Their Employment

Relations Practices?

One answer is as obvious as the latest headline from almost any area of the country:

"Employee sues and wins $$$$ judgment against Employer." The audit helps us to eliminate

many simple but common errors that employers, especially new businesses, often make. The

audit also serves to educate HR professionals on the latest trends and best practices used by

their peers. The HR audit can give those responsible for employee relations some reassurance

that legal risks have been managed and minimized, thus freeing them to focus on more

creative aspects of their jobs that can add value to the employer's bottom line.

There are also other benefits to doing an HR audit. If your company is in the market for

financing, investors will want to know that you have done all you can to protect the company

from unnecessary lawsuits. The results of an HR audit can be presented to investors for their
due diligence review. Similarly, if an employer is interested in obtaining Employment

Practices Liability Insurance, the insurance carrier will assess the degree of existing risk by

asking many of the same questions one would ask in an HR audit. Typically, an insurance

company will not issue a policy unless the employer can demonstrate (i) substantial

compliance with applicable employment laws and (ii) the existence of appropriate

employment procedures and policies.

How Do We Do An HR Audit?

This is where the time and effort part comes in. First, we need to know what to look at and

what questions to ask. Then, we need substantive knowledge of the applicable legal

requirements so that we can evaluate whether what we have found satisfies the laws that

apply in our workplace.

Most Human Resources professionals are well aware of the issues that create the greatest

legal risks. Hiring, firing, benefits, wage and hour compliance, employee handbooks, and

illegal discrimination are the most common areas where lawsuits arise. In order to assess the

degree of exposure that a company has, we must first be familiar with the legal requirements

in each of these areas. Other legal obligations arise from state and local laws as well. The

Human Resources professional must also have at least a basic familiarity with the employer's

obligations under those laws.

You can still do an HR audit even if you do not have the necessary legal knowledge yourself.

There are commercial HR audit tools available that will guide you through a self-audit. In

addition, there are service providers who will perform an audit for you for a fee, and other

professionals who will perform the service at no charge as an adjunct to other services they

provide. Regardless of how you do your audit, we strongly recommend that you involve your
employment lawyer at the beginning of the process because it is important to protect the

confidentiality of your audit and avoid creating evidence that would document potentially

illegal current practices.

If we assume a knowledge of the substantive law, the next step in conducting an audit is to

gather information on your operating environment and procedures. Typically, you will be

guided in this process by a checklist (which might be in print, on software, or web-based).

The checklist will ask you questions on your practices and policies in many areas. It might

also ask for copies of your existing employment policies and forms, and your employee

handbook. This part of the process may be tedious and time consuming, but it should not be

difficult.

Analyze Your Information

After you have provided the information requested in the checklist, it is time to analyze your

employment practices and policies to determine whether your company is in compliance with

applicable laws. At the same time, a good audit will provide guidance to help you avoid

common mistakes that lead to employee claims. For example, does your handbook have an

appropriate description of employees' rights under the Family and Medical Leave Act? Does

your handbook include the one provision that can almost guarantee you will not be sued for

sexual harassment? (Ask employees to acknowledge that they are aware of their rights and

responsibilities in this area.) Are workers who are entitled to overtime pay properly classified

as non-exempt? Does your employment application request information that is inappropriate?

Does it have language that preserves the at will employment relationship? Do hiring

personnel know the difference between legal and impermissible interview questions?
The net result of your HR audit should be some sort of scorecard, or a list of action items that

need attention. What you do next is the key to whether the audit will be a success or a

potential disaster.

Take Action

The audit report should provide both a snapshot of your company's strengths and also a

roadmap for how to correct its weaknesses. If you act to correct the deficiencies, the audit

will have been a worthwhile project. However, if you find areas where your company is not

complying with its legal obligations and do not correct those problems, the audit report may

come back later as extremely damaging evidence in an employee's lawsuit. The simplest way

to look at it is, don't start an audit unless you are willing to follow through and change what

needs to be changed!

We suggest that you prioritize the action items. For example, we often find that employment

handbooks need immediate changes, especially in the area of anti-discrimination policies.

Also, we have yet to find an employer that does not have someone misclassified as an exempt

worker. (OK, that might be a slight exaggeration!) After the emergency items are corrected,

turn to the other areas that need improvement. Sometimes all that is needed is a new or

rewritten policy statement. Other times, we might recommend management training (e.g.,

hiring and interview procedures). The key here is to make a list, assign the work, and stay

with it until you have made all the necessary changes.

Let's Get Started!

First, assess your abilities and your available time to perform the Human Resources audit.

Next, choose the appropriate audit tools that best suit you and your company. Should you
perform the audit yourself using software or the Internet? Should you hire a service provider?

Confer with your employment lawyer before you start.

The audit will take time and attention. Yes, it may be tedious. However, the benefits you will

obtain for your company will be well worth the effort. In addition to the potential for

lessening exposure to legal risks, there is a related benefit. Your employees will realize that

the company values their contributions and is committed to improving the workplace for all

The content of this article is intended to provide a general guide to the subject matter.

Specialist advice should be sought about your specific circumstances.

 BIBLIOGRAPHY

“Human Resource Management” Fifth Edition 2008, by Dr.K.Ashwatappa

published by the Tata McGraw-Hill publishing Company Ltd.

“Strategic Human Resource Management” 2003 by Jeffrey A.Mello, Thomson

Publishers.

“Strategic Management” 2003 byArthur A. Thomson and J. Stricklard, TMH.

“Strategic Management and Business Policy”, 1988 by Donald F. Harvey, Merill

Publishing.

Website:

http://en.wikipedia.org/wiki/Special:Search?

search=human+resource+audit

http://freehrguide.com/2010/01/simple-hr-audit-stepsin developing.html/

WWW.hireach.co.in