Human Resource Audit Services


    • Systematic, objective, and critical reporting of HR functions. 
    • Ensures legal compliance.
    • Asses inefficiencies in the implementation of policies.
    • Evaluation of employee hiring and training programs.
    • Auditing of HR climate.


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The human resource department plays a vital role in the effective functioning of a business. The human resource audit is a type of audit that ensures the verification of current practices, policies, procedures, and documentation of the HR system in an organization in an objective and systematic way. 


Reports from such audits help an organization identify the underperforming areas and require improvement and enhancement. Although a human resource audit is not mandatory by law, many companies prefer to perform HR audits because it can highlight the effectiveness of the various policies implemented by the department and their effect on the employees. 


Objectives of Human resource audit 


  • To conduct an audit of the HR functions of an organization in an independent, systematic, objective, and critical manner. 
  • To assess the effectiveness of the various policies implemented by the Human Resource Department. 
  • To assess the inner-functioning and performance of the HR department. 
  • To make sure that the activities conducted by the Human Resource Department comply with all of the laws, regulations, and statutes. 
  • One of the objectives of a human resource audit is to identify any areas within HR which require further research, development, and improvement. 


Approaches to Human resource audit 


➤Comparative approach- Under the comparative approach, the auditor will identify a competitor’s company as the model and then compare the organization with the model company. 

➤Management by objective approach- Under this approach, an auditor will define a fixed number of targets and then measure the performance against said targets. 

Statistical approach- Under the statistical approach, the auditor will evaluate a company's performance with the help of the statistical information maintained by the company. 

➤Outside authority approach- In this approach, the auditor will use the benchmark of performance developed by an outside consultant as a set standard against which the organization’s performance will be judged

➤Compliance approach- Under the compliance approach, the auditor will determine if the company has complied with all legal procedures and the company's policies and procedures. 


Types of Human resource audit 


➤Legal compliance audit- This type of HR audit is performed to ensure that the company is complying with all employment and company laws. 

➤Departmental audit- This type of HR audit focuses on the department's efforts. 

➤Employee training and hiring audit- While the employee hiring audit audits a company's hiring process, the employee training audit evaluates the training program of a company. 

➤Policy audit- A policy audit is a type of HR audit that reviews HR's current and upcoming policies to ensure consistency. 

➤Internal and external audit- An internal HR audit is an audit that follows internal procedures and protocols and is conducted by officers who are employed with the company. External HR audit, however, is performed by external organizations such as human resource audit services firms. 


Process of Human Resource Audit 


➤Determine the scope and type of the audit- The audit team is required to determine the type and scope of audit suitable for meeting the target of review. 

➤Develop the audit questionnaire- The auditor will develop a questionnaire that elicits information that is suitable for developing a comprehensive document. 

➤Collect the data- Once the questionnaire has been prepared, the auditor will use that to collect raw data. 

➤Benchmark the findings- To analyze the data, the auditor must use an HR benchmark to compare them with. 

➤Provide feedback about the results- Once the auditor has compared the data, they must summarize it and provide the HR team with necessary feedback and recommendations. 

➤Create Action Plans- Once the audit is finished, the company must use the report's information and the auditor's recommendations and make some changes. 

➤Foster a climate of continuous improvement- After the audit, the HR team should continually engage in improving the practices of the company. 


Advantages of Human resource audit 


➤Legal compliance- A human resource audit ensures legal compliance with various statutes, laws, and regulations. 

➤Identifies inefficiencies- Human resource audits can help a company identify the departments and areas which require improvement. It can also help elucidate the strengths and weaknesses within the HR policies. 

➤Determines HR’s contributions- Human resource audits can determine the contributions of the HR department towards the achievement of organizational goals and objectives. 

➤Employee performance- HR audits are useful for the HR manager during the employee evaluation process. The audits help the HR manager assign job positions to the employees and decide which employee deserves a promotion. 

➤Boosts employee morale- HR audits help boost employee morale and motivate them to do better at their jobs. 


Why choose Especia? 


Especia is one of India’s leading human resource audit services firms, tax auditing services firms, statutory audit services firms, and consultants. We at Especia are proud to have assembled a dynamic group of professionals and auditors who understand the purpose and need for human resource audit services in India. We can perform human resource audit services for specific industries, i.e., manufacturing, trading, online, and e-commerce; Especia has got you covered.


A business requires human resource auditing for the following reasons- 

  • Businesses require HR audits to ascertain and judge the improvement in the performance of their employees. 
  • They require an HR audit because of the HR department's positive influence on employee motivation and participation. 
  • The requirement for an HR audit is there because of the pressure from employee trade unions in the formulation of favorable employment policy and determining the management's competency.

The scope of human resource auditing is- 

  • Auditing of human resource policies- This audit determines whether the HR policies are in accordance with the organization's objectives, who can suggest changes to the policies, and how often policy revision and formulation occur. 
  • Audit of human resource functions- This refers to the audit of HR functions such as recruitment, selection, induction, training, performance evaluation, and health and safety. 
  • Audit of HR practices and procedures- This refers to the audit of HR practices, policies, and procedures. 
  • Audit of HR climate- This refers to auditing the practices and policies of the human resource management, which help improve job satisfaction, morale, and performance of employees.

Human resource audit services are beneficial to a business because- 

  • Human resource audit services are cost and time-efficient for a business. 
  • The reporting from human resource audit services is devoid of any personal biases and tampering. 
  • They increase the efficiency of the HR team and improve managerial performance. 

Also, professionals who work for such human resource audit services make sure that your business and HR department is legally compliant.

Like most audits, human resource audits should be conducted once every year. It is the norm to conduct an audit at the end of the fiscal year because it helps the auditor analyze if the company's objectives were met and how efficiently they were accomplished.

The following human resource management areas are audited- 

  • The auditor will audit the human resource management’s mission statement. 
  • The auditor will audit the objectives, strategies, goals, policies, and accomplishments of the human resource management. 
  • The auditor will audit the efficiency with which the HR management carries out its policies and its practices and values. 
  • The auditor will also audit the human resources department's role in maintaining the quality of overall management.

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