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Business owners: 3 reasons to conduct a compliance audit

On Behalf of | Aug 17, 2021 | Marketing Law

Larger organizations often have in house counsel to help better ensure the business follows applicable regulations, but smaller and mid-size businesses may not have this luxury. As a result, it is important to conduct regular, proactive compliance audits to better ensure your business is not in violation of any federal, state, or local regulations.

How can I make sure my business has a strong compliance program?

As noted in a recent report by Thomson Reuters, business leaders will not have a successful compliance program if they approach it with a “one size fits all” mentality. Customization is the key to a successful compliance program.

Although customization is important, there are some commonalities for almost every business. Three specific areas of concern that apply to most types of business and are important to include in every compliance audit include:

  • Security. Cyber-security measures are important to protect sensitive information. Check to see that your business has needed protections and address any areas that may need increased support. Business leaders should also make sure paperwork and other forms of sensitive information are safe by having procedures for handling this type of paperwork. This could include shredding practices and locks.
  • Discrimination. You can proactively reduce the risk of allegations of sexual, age, gender, religion, ethnicity, and other forms of discrimination with training. The risk generally decreases when workers are aware of what is and is not allowed.
  • Taxes. Business owners are likely required to pay employment taxes. A failure to do so can result in serious charges of wrongdoing, potentially including criminal charges. Review tax obligations and make sure you are meeting the Internal Revenue Service (IRS) expectations as well as those of state and local taxing authorities.

Additional matters will vary depending on the type of business. This is when customization comes into play. For example, businesses like a gas stations would also need a review of compliance with environmental laws while those that conduct marketing campaigns will need to make sure they comply with the Telephone Consumer and Protection Act. 

To complete the audit, it is important to interview employees from different parts of the business. Business owners can then designate a compliance officer or team to use this information to put together a work plan to address any issues.