HR audit

What is an HR audit?

An HR audit is an unbiased examination of the company's human resources policies, practises, and procedures. The goal is to identify problem areas and/or ways to improve. The company  can either hire an outside company to conduct the audit or instruct the HR department to conduct an internal audit.

HR audit

What specific areas to HR audits examine?

When a company conducts an HR audit they can look into one or more of the following areas, depending on their concerns, budget, and time frame.


Any human resource management team will want to know if they are in compliance. An HR compliance audit examines how well the company complies with current employment laws and regulations at the local, state, and federal levels. This is a risk management audit. The goal is to ensure that the company is not breaking any laws or exposing itself to liability lawsuits.

Best practices

An HR best-practices audit compares your HR processes and policies to industry best practises. This type of audit can be extremely beneficial to a growing business because it can help ensure that the company on the right track as you increase payroll, create handbooks, establish job descriptions, and set expectations for new employees.


An HR performance audit entails a review of personnel files with the goal of determining the quality of feedback your managers provide to their employees. Employee development can be hampered by a lack of quality feedback. Before employee development suffers, a performance audit can identify issues with the review and feedback process.


An HR competitiveness audit examines all aspects of employee compensation and benefits to determine whether the company is doing everything possible to attract the best-qualified employees. Even if the company can't compete on wages or salaries, a competitiveness audit can identify other areas (such as telecommuting options and flexible work schedules) that will make the company more appealing to applicants.


A function-specific audit is a type of mini-audit that looks at only one aspect of the HR processes or policies. The company could look into payroll management, employee review policies, record-keeping efficiency, and so on.

Why are HR audits necessary?

An HR audit is the only way to determine whether the HR processes and policies are beneficial or detrimental to your overall business. The business will suffer if the company is facing a lawsuit or a criminal investigation, if the HR systems are inefficient, if the employees are not developing, or if the company is unable to attract the right employees. Improve those areas, and the chances of success will improve.

What are the types of HR audit?

1. Records Audit

It is not enough to be compliant with the assorted employment laws. Employers ought to demonstrate compliance through production of accurately maintained and keep records. Records audits bring attention to potential violations that may usually be remedied inadvisably. A missing signature on associate degree acknowledgement kind, unbridled box on associate degree I-9 or inclusion of medical documentation in an exceedingly personnel file might seem to be minor problems, however every will subject a company to fines and penalties, or increase potential damages in an exceedingly causa or settlement. Below area unit topics and inquiries to contemplate.

2. HR Functions Audit

A time unit functions audit appearance at the assorted functions of the time unit department, however those functions area unit being conducted, and whether or not they area unit effective and economical. These audits usually target specific aspects of the time unit functions, for instance hiring/recruiting, benefits, compensation/payroll, performance analysis or termination/post employment.

3. Legal Compliance Audit

A legal compliance audit measures however well a corporation is yielding with federal, state and native employment and labor laws and involves a radical review of 60 minutes policies and procedures to make sure wrongfully mandated needs are incorporated and followed. A legal compliance audit can embody the records audit represented on top of, however conjointly includes a review of a company's written and unwritten policies and considers whether or not those policies increase or mitigate 60 minutes risk. it's typically useful to approach the review with specific laws in mind.

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