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Human Resource Audit

Presented by :
Vikas Tiwari
Rohan Thareja
Ankit Relan
Rohit Choudhary
HR Audit
HR Audit means the systematic verification
of job analysis and design, recruitment and
selection, orientation and placement,
training and development, performance
appraisal and job evaluation, employee and
executive remuneration, motivation and
morale, participative management,
communication, welfare and social security,
safety and health, industrial relations, trade
unionism, and disputes and their resolution.
HR audit is very much useful
to achieve the organizational
goal and also is a vital tool
which helps to assess the
effectiveness of HR functions
of an organization.

The Human Resources (HR) Audit is a
process of examining policies, procedures,
documentation, systems, and practices with
respect to an organizations HR functions.

The purpose of the audit is to reveal the
strengths and weaknesses in the nonprofits
human resources system, and any issues
needing resolution.

The audit works best when the focus is on
analyzing and improving the HR function in
the organization.

Scope of Audit:
Generally, no one can measure the attitude of
human being. It covers the following HR areas:
Audit of all the HR function.
1. Audit of managerial compliance of personnel
policies, procedures and legal provisions.
2. Audit of corporate strategy regarding HR
planning, staffing, remuneration and other HR
3. Audit of the HR climate on employee
motivation, morale and job satisfaction.
Benefits of HR Audit:
Benefits to the organization are:
1. It helps to find out the proper contribution of the
HR department towards the organization.
2. Development of the professional image of the HR
department of the organization.
3. Reduce the HR cost.
4. Motivation of the HR personnel.
5. Find out the problems and solve them smoothly.
6. Sound Performance Appraisal Systems.
7. Systematic job analysis.
8. Smooth adoption of the changing mindset.
audit process
The audit process consists of a series of questions covering the
eight primary components of the HR function:
Roles, head count, and HR information systems (HRIS)
Training, development, and career management
Compensation and benefits
Performance measurement and evaluation
Termination and transition
Legal issues and personnel policies

The team works to collect information to answer the HR audit questions
in each of these categories. The focus is on how these activities and
tasks are actually performed in the organization. The first step is to
collect all the pertinent information. The process of getting
information, in and of itself, can be quite informative.

1. Effectiveness: To review performance of Human resource Department and its
activities to determine effectiveness.

2.Implementation: To locate gaps, lapses, failings in applying Polices,
Procedures, Practices & HR-directives. Also to see areas of wrong/ non-
implementation that hindered the planned programs & activities.

3.Rectification: To take corrective steps to rectify mistakes, shortcomings
contesting effective work performance of HR Department.

4.Evaluation: To evaluate HR Staff & employees.

5. To evaluate the extent to which Line Managers Applied Policies Programmes &
Directives initiated by Top Management & HR Department.

6.Modify: To review HR System and Modify to meet challenges in comparison
with other organizations.

7.Questioning: To seek answers to What, Why When Happened while
implementing Policies, Practices & Directives in managing HRs
Major Areas:

Planning - Forecasting,


Staffing & Development,


Motivation & commitment ;

Administration ;

Research & Innovation.
Audit of HR Function:
For each activity in the HR Audit functions Auditors must:

1 determine objective of activity.

2 Identify who is responsible for its performance.

3 Review the performance.

4 Develop action plan to correct deviation, between Results & Goal.

5 Follow up action plan. HR Evaluation must justify existence of
department & its expenses. Department has no reason to function if
fails to
contribute to Companys bottom-line, Prune expenses to make
department viable.
Auditors Role:
FIVE Approaches to HR Audit:
Comparative Approach.

Outside Authority Approach.

Compliance Approach.

MBO Approach
Comparative Approach

Auditors Identify another Company as a MODEL. Result of their

Organization compared with those of Model Company.

Outside Authority Approach

Often, Auditors use standard set by Outside Consultant as

BENCHMARK for comparison of own Results.

Compliance Approach

Auditors review Past Actions to determine if those activities comply with legal

requirements and Company Policies, & Procedures. A Final approach is for

Specialists & Operating Managers to set objectives in their areas of responsibility.

Management By Objectives Approach

creates Specific Goals against which performance can be measured. Then the



Audit Report

The Prog comes to end with preparation
of Report. Report may be Clean or
Qualified. It is Qualified if HR
Performance contains Gaps for which
remedies suggested. Report is Clean
where Performance is fairly Satisfactory