Understanding and Executing Compliance Audits

What is a compliance audit?

A compliance audit is a comprehensive review and evaluation of a business or organization’s compliance with a voluntary compliance framework (e.g., SOC 2) or a regulatory requirement (e.g., GDPR). The scope of a compliance audit depends on which framework/regulation the auditor is evaluating against and, for some frameworks, what type of information the organization stores and how they utilize it. 

Even if your business is just taking off, you already know that data handling should not be taken lightly and that your clients/customers will need assurances regarding their highly valuable data. To help businesses understand the best ways to keep that data safe, standard-setting associations (e.g., National Institute of Standards and Technology, American Institute of Certified Public Accountants) have developed different audits as a solution. 

For instance, the American Institute of Certified Public Accountants (AICPA) developed the SOC 2 audit, which tests a service organization’s internal controls to provide a report that details the necessary assurances for the client, customers, employees, any third-party stakeholders and the service organization itself. 

Why Your Organization Needs to Conduct IT Compliance Audits


The top reason to go through an IT compliance audit is to give your customers the assurance that you are protecting their information to the fullest extent possible. In getting a reputable third party to say “yes, XYZ company is compliant”, you’ll earn trust more quickly and acquire customers more easily. 

Here are the primary reasons why organizations go through IT compliance audits: 

1. Your customers require verification before they’re willing to put their trust in you. 

At this time, when it comes to matters of data security and data privacy, many organizations will not simply take your words at face value. Instead, IT and procurement departments within organizations will ask to see proof of audit findings from a certified public accounting firm before they’ll consider doing business with your firm.   

Some of the most commonly required or requested data security frameworks require organizations to complete an audit before they can call themselves compliant (e.g., SOC 2, ISO 27001). 

2. You’re in a highly regulated industry and must meet industry-specific standards to conduct business legally. 

Your organization may be subject to industry-specific standards. For instance, your organization would be required to be compliant with the Health Insurance Portability and Accountability Act if you process individuals’ medical records and other protected health information). HIPAA requires health care providers, health plans, health care clearinghouses, and their business associates — to protect individuals’ medical records and personal health information (PHI) and alert individuals, the media, and the government under certain circumstances if a breach occurs.

3. You want to enhance your security posture and minimize the chances of falling victim to costly data breaches.

Preparing for a compliance audit is the best way to find gaps or holes in your data security program. The process of implementing a security compliance framework such as ISO 27001 or HIPAA gives you the chance to see where your organization is falling short and where you can shore up your processes and policies. Then you can implement new measures or update existing policies and procedures to better protect your organization and your customers’ data.

4. Competitive differentiation.

You want your organization’s approach to compliance to be your competitive edge (e.g., B2B buyers, particularly those working for enterprises, may choose you over competitors if you can convey the sense of security that others cannot).   

What’s typically involved in a compliance audit? 

Compliance audits typically involve providing documentation of your internal controls to an outside auditor. An internal control is really any process that mitigates risk and reduces the chance of an unwanted outcome. During an audit, the auditor’s job is to evaluate the evidence you provide to assess whether your internal controls are designed effectively, operating as intended, and adequately protecting your organization from a specific set of risk outcomes (e.g. a data breach, a lawsuit resulting from a user privacy violation, etc.).  

Documents that auditors may request from your organization include: 

  • Internal policies
  • Documentation of certain procedures
  • Meeting notes, and 
  • Emails 

When you look at all of the different policies and processes in place in your business surrounding data security, you can see how time-consuming formal audits can be, both to prepare for and complete.

Related: Internal Controls and Data Security: How to Develop Controls That Meet Your Needs

How to Prepare for Audits (and Do So Efficiently)

What are the phases organizations need to go through to prepare for a formal compliance audit? 


When preparing for an audit, taking the following steps can help you have a smooth journey and successful outcome:

  1. Develop a project plan. Treat implementing a new data security framework like a project and manage it closely. Develop a timeline, make sure the right people are involved, and ensure everyone understands the importance of successfully completing this project. 
  2. Perform a risk assessment. Risk assessments are foundational to an effective compliance gram. After all, your compliance measures should be tailored to minimize the risks that are material to your organization. To properly identify risks to your information systems, you’ll need to inventory your data assets, gain a clear view of where all data reside, and who has access to what.  
  3. Design and implement controls. Once you know your risks, you can develop internal controls to mitigate them. Controls are processes designed to provide assurance that your business is meeting its objectives in security, data privacy and the effectiveness of your operations. 
  4. Document your work. During an audit, one of the main ways you will show compliance is through documentation. You should keep detailed records on your processes, policies, training, implementation, internal and external audits, and any other activities related to your compliance efforts because auditors will need them to verify the efficacy of your internal controls.   
  5. Conduct an audit readiness assessment.To mitigate the risk of failing an audit, your organization should conduct a compliance audit readiness assessment before the formal audit. Although this is a voluntary exercise, it can be a highly beneficial exercise, especially if you’re going through an audit for the first time. You can think of an audit readiness assessment as a “preparatory test” before the real test, or as your dress rehearsal before a performance in front of live, paying audience. It’s an opportunity to discover weaknesses in your internal control environment so you can fix those issues before the formal audit happens.
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During an audit readiness assessment, which should ideally happen a couple of months before the formal audit, the auditor will talk with the key personnel involved in compliance within your organization. These interviews are a means for auditors to understand your key policies and compliance processes. Once their interviews are complete, your auditor will write up a report outlining the gaps in your program or areas where your organization’s compliance efforts need more work.

6. Conduct a formal audit. At this point, you should have completed an audit readiness assessment, seen what wasn’t working, and taken the time to shore up any aspects of your compliance program that needed work. If you’ve done all of this work beforehand and know what to expect from the auditors, this process should be relatively smooth and hopefully won’t uncover any gaps in your program you weren’t aware of.

A caveat about formal audits: It’s important to remember that a formal audit will not catch all of the potential vulnerabilities in your security or compliance programs. They are a point-in-time exercise and only give you a snapshot of how your compliance program is working at the time the audit is conducted. To adequately mitigate risk, it’s crucial to test your controls and remediate identified weaknesses on an ongoing basis. 

Now that we’ve discussed the key steps of an audit process, let’s spend a moment on the key resources you’ll need to get the best results from your effort.

Resources Needed for Compliance Audits

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1. Dedicated resources and people: Implementing a compliance framework and completing an audit will require time, money and knowledge. Going through the process of identifying your risks, selecting the right compliance framework, meeting with auditors and reviewing your controls will take time away from other valuable work (e.g., product development). You can also expect to spend anywhere between $10,000 to $100,000 on a single audit.

If you’re going through an audit for the first time (or even the second or third time), it’s imperative to get expert support. There are many professional service firms out there that specialize in various cybersecurity and data privacy frameworks; they can help you gain a better understanding of the requirements of the law and work with you to develop tailored controls for your environment. 

2. Leadership support: Leadership support is crucial for a few reasons. 

  • First, compliance employees need to have some authority to change, develop, and implement operational  processes and enforce disciplinary actions for noncompliance. Without the support of management and the c-suite, they can’t exercise that authority. 
  • Second, compliance needs to be a part of your company culture, and if it’s not a priority for executives, it won’t be a priority for anyone else. When executives are bought in, they make decisions that center compliance, show their employees that it’s a priority, and create an environment where everyone understands the importance of data security and privacy.

3. Software: If you’re using ad-hoc tools (e.g. spreadsheets, emails, Google Drive) to document compliance requirements and keep track of your tasks for each audit, managing compliance projects can quickly becoming time-consuming and overwhelming to your staff. In fact, in a recent survey of 526 compliance professionals, Hyperproof found that a typical compliance professional spends about 20 percent of their total work hours on administrative activities (e.g., searching through emails to find compliance documents needed for audits). That adds up to 52 work days every year and represents a six figure cost to a midsize organization.

Utilizing a dedicated compliance software like Hyperproof can help you save time preparing for audits and better prioritize the work that needs to be done. Hyperproof allows you to easily see the requirements for different compliance frameworks (e.g., SOC 2, ISO 27001, GDPR), create or update internal controls, store, tag, and organize compliance evidence and automates many repetitive administrative tasks associated with the audit process.

Project or issue management software such as Jira, Trello, Basecamp, or Asana can also be helpful in tracking your compliance team’s work and ensuring accountability when an issue is identified. 

Moving Forward With Compliance Audits

While compliance audits are crucial for gaining your customers’ trust and protecting their data, they can be time consuming, expensive, and frustrating to prepare for. Taking the time to go through an audit readiness assessment before the formal audit will help you pass your audits and do so with  fewer roadblocks.

Additionally, you can use tools like Hyperproof to cut down the amount of administrative work from your compliance processes — so your team can focus their energy on the tasks that truly make your organization stronger.

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*** This is a Security Bloggers Network syndicated blog from Hyperproof authored by Jingcong Zhao. Read the original post at: