How to Select an External Compliance Auditor?

By CIOReview | Tuesday, August 30, 2016
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In the current business scenario, selecting the right auditor for an organization is one of the many crucial decisions that a Chief Information Officer (CIO) needs to take. As it is a long-term decision, research needs to be done to understand the ways in which the prospective auditor will help pertaining to the business of the company. In this article, we will take a detailed look at the entire process for choosing an external compliance auditor.

What is Compliance Auditing?

Compliance Auditing is the process of determining whether an organization has or has not followed the applicable rules that are in place pertaining to a transaction. Over the course of a compliance audit, auditors review the strength and thoroughness of compliance preparations. Apart from this, they also review the company’s security policies, user access controls and risk management procedures.

Importance of Compliance Auditing

Despite the fact that an audit is often thought of to be negative, it is a valuable tool. To ensure that the company meets regulatory requirements, an impartial evaluation of compliance programs are necessary. An effective audit helps an organization determine the potential underlying causes for deficiencies as well as curtailing the percentage of its reoccurrence in future. To ensure that the audit yields meaningful results, a lot of time is devoted on planning and preparing to conduct an audit.

Who Can Perform Compliance Audits?

There is no hard and fast rule as to who can conduct compliance audits. It can be performed by employees of the company, public accountants hired by the organization or a regulatory agency assigned government auditors. Usually, compliance audits are done by internal auditors ahead of their counterparts in a bid to detect potential problems and rectify it. Apart from that, internal auditors also help CIOs in verifying whether the security administrators are following the system access protocols. However, even after audits being conducted by internal auditors, organizations need to deploy external compliance auditors to run PCI DSS, HIPPA or Sarbanes-Oxley audits for compliance validation.

How to Choose an External Compliance Auditor

The primary role of an external compliance auditor is to express an opinion on whether an organization’s financial statement is free of material misstatements. But the role of the external auditor does not end there, as the auditor can act as an advisor, ally and educator. Here are some factors that a CIO can ponder upon before selecting an external compliance auditor:

• Variety and Recognition Matters—While selecting an External Compliance Auditor it is imperative to choose one that has worked on a variety of audits and has made a name in the market. Deploying auditor from reputed firms, which has worked on various audits arms the organization with the advantage of authenticate audit reports.
• Do a Background Check— Doing a thorough research on the auditor that the CIO wants to select is an important aspect. This provides insights on the experience factor that the auditor possesses. This also enables the company in ensuring that a senior-level auditor is there as back-up, if the provider assigns an auditor that is just beginning his/her career.
• Negotiate the fees— Deciding on the fees is another factor that needs to be settled prior to selecting the external compliance auditor. Like any other business service, the fees decided upon must be fair and reasonable for both the organizations and the auditing firm.
• Make sure that the Vocabulary matches— This is the most important factor as any miscommunications in this regard can corrupt the findings of the audit. It is necessary that both the parties be in accord when it comes to understanding the organization’s internal definition culture.

Conclusion

Finalizing the right external compliance auditor is a hectic process but the benefits of it are many fold. The detailed analysis helps a CIO to select an auditor that works best for the organization and with whom working together is more comfortable rather than feeling stressed.