Human Resources Governance and Compliance: Human Resources Audit and Investigations

Abstract

The following chapter provides an overview of HR audit and investigation processes, conducted by internal auditors (also referred to as internal audit or corporate audit department) as a key tool to ensure a company’s long term success – a risk management approach to remediate proactively the risk of ineffective, inefficient processes and undetected weaknesses, as well as incompliance with applicable regulations, unethical behavior, and misconduct.

A comprehensive presentation of all aspects of an audit is beyond the scope and objective of this chapter. The aspects of an investigation will be discussed only where explicitly a substantial difference to the processes of a business process audit are perceived by the auditee. This is dealt with in separate sections called “Specific Characteristics of Investigations.” In general a business process audit is a systematic screening whether laws, policies, and guidelines are followed in practical application and whether the business processes are effective and efficient. An investigation is targeted usually at one specific incident in which violation against company rules and regulations is suspected whereby investigators use forensic methods, among others. Investigations often are conducted based on a whistle-blower or a hint coming up during another audit and often are individual related due to personal wrongdoings.

The following sections focus on the aspects of the audit processes that are perceived by the members of the human resources department as the audited area. Therefore, it is mainly looked at from the perspectives of the HR management in order to provide tips and ideas for HR professionals on how to cope with challenges of internal audits and how to use the potential benefit that an audit has for the respective HR organization.