5 Types of Compliance Audits (And Why You Should Know Them)

by Brad Garland

If your business has not undergone a compliance audit up until this point, it’s not something you should ignore until absolutely required to pay attention. In fact, the more prep work you can put in for the most relevant compliance audits for your company, the better. This way you are never caught unprepared and have your business hampered or even shut down because of legal compliance you weren’t even aware of.

Compliance audits are run by independent agents to ensure that your business is abiding by certain rules and regulations, confirming minimum levels of quality production, performance, financial oversight, cybersecurity infrastructure, and more. These are not only done to sustain standards of excellence in your employees and business processes, but also to give your customers greater assurance that your company is committed to a higher level of results delivery.

Let’s look at several types of compliance audits and what each one might mean for your business.

Fair Lending Compliance Audits

In our society, financial borrows use credit and loans for almost every pursuit in life, from business ventures to educational aspirations and simply handling unexpected demands for the home budget. Those companies that lend financial assistance to others must adhere to strict regulations, with violations of such inflicting severe penalties. This includes anti-discriminatory practices, proper reporting of lending practicing, financial data collection procedures, and similar. If you are concerned that your business might be involved in any financial transactions that would involve discriminatory practices of any sort, this compliance audit is critical to avoid hefty fines and other punishments due to a violation.

Deposit Operations Compliance Audit

When handling finances for private individuals and businesses, if you receive funding of any sort into an account you manage on behalf of your customers or users, then you have a deposit operation in place. This helps you track the amounts being deposited and the nature in which they are secured and kept confidential except for authorized users. Especially for banks and other financial institutes, this internal control system is essential to maintaining accurate records and securing client trust. If errors occur for deposits, these discrepancies must be detected and corrected before any lasting harm can happen because of them. A deposit operations compliance audit is an in-depth review and testing of your system to ensure regulatory adherence and identify potential high-risk points where deposit errors might be allowed. 

BSA/AML Compliance Audit

This audit focuses on the Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) law passed by Congress back in 1970. These two regulatory oversights apply to financial institutes that must keep records of notable cash purchases, report cash deposits greater than $10,000, and report any suspicious activity concerning the exchange or funneling of funds that could signal money laundering, tax evasion, and other illicit financial activity. Compliance focuses on comprehensive testing of risk-based areas, review of documentation for internal policies and procedures, an analysis of company process weakness, and other verifications of adherence to BSA/AML recordkeeping and reporting requirements. 

Industry-Specific Compliance Audit

Each unique industry will have specific compliance audits relevant only to that market area. For instance, credit card companies, payment processors, and merchants must adhere to PCI compliance standards. Doctors and other healthcare practitioners must follow regulations according to the HIPAA standards. And the US government agencies must keep their data secure according to the FISMA compliance regulations.  

ISO 27001 Compliance Audit

If your business has been investing in the ISO 27001 certification, you want to protect that by ensuring you maintain the highest level of security and data protection for both your company and clients’ sakes. A ISO 27001 compliance audit identifies any gaps in your current processes and the requirements to achieve or maintain ISO 27001 certification so you can remain confident in how you handle your data--be it financial information, intellectual property, or otherwise. The compliance audit evaluates any areas that need correcting before the actual certification agent analyzes your infrastructure and mitigates the risk of losing that status. 

Many different compliance audits may be applicable to your business depending on the exact nature of the services and products you offer customers and partners. But in the end, all compliance audits are there to protect yourself from financial penalties due to violations, from losing customers over a loss of trust in your organizational brand, and to give you peace of mind knowing that your company is committed to higher performance standards that don’t compromise quality or security.

Want to learn more about specific compliance audits and determine which ones are best for your business? Contact Vala Secure today to discuss!

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