Different Types of Compliance Audits and Why They are Important
Different Types of Compliance Audits and Why They are Important. Companies that handle or process user data should comply with various industry standards aimed at safeguarding users. These regulations vary depending on the size and type of business and industry. For companies to keep pace with the various regulations affecting their operations, they must undertake robust compliance audits.
This article discusses compliance audits in depth, as well as some of popular audits that companies have to undertake. Read on!
What are Compliance Audits?
Compliance audits are independent evaluations that establish if an organization follows external laws, rules, and regulations. The assessments focus on checking how well an organization complies with controls, bylaws, policies and procedures, some of which may be internal. These compliance audits focus more on the internal security controls and procedures.
Compliance audits are essential for various reasons. They help ensure a company follows achieves all the set requirements . They ensure the company operates within the set security guidelines. Additionally, compliance audits pave the way for recommendations on ways an organization improve to prevent future deficiencies or nonconformities. By establishing the number of compliant processes against the non compliant ones, organizations identifies the risk areas and take corrective measures.
Here are 8 types of compliance audits:
1. HIPAA Compliance Audit
HIPAA refers to the Health Insurance Portability and Accountability Act that protects the security and privacy of confidential medical information. Any company that handles health related information for clients in operations, treatment, or payment must be HIPAA compliant.
A HIPAA audit checks that organizations comply with the standards for protecting personal data. Compliance is mandatory for data’s electrical, physical, and procedural security. The steps to completing a HIPAA compliance audit are the following:
- Reviewing of the security and compliance standards.
- Evaluating the risk management plan.
- Verifying non disclosure and authorized access to PHI.
- Assessing authorization measures.
2. PCI Compliance Industry Audit
The Payment Card Industry Data Security Standard (PCI DSS) is a requirement for businesses that handle cardholders’ data. Refers to the technical and operational standards companies must follow to secure and protect clients’ credit card data when processing them.
A PCI DSS compliance audit ensures that an organization has the proper standards to store and secure electronic payment data. Networks, processes, and systems should be able to protect sensitive information by restricting unauthorized access to cardholder data.
The steps for the compliance audit entail the following:
- Identifying vulnerabilities, threats, and risks of card data
- Analysing the risk levels.
- Mapping out the card data flow.
- Recommendations for a risk management strategy.
- Evaluating the information security policy.
3. SOX Compliance Audit
Sarbanes-Oxley Act (SOX) compliance is a requirement for publicly traded companies that operate in the United States. The standards require them to establish financial reporting standards such as tracking attempted breaches, safeguarding data, logging electronic records for auditing, and proving compliance.
A SOX compliance audit identifies and strengthens internal controls for businesses. With the proper documentation processes, companies stay focused on high risk priorities, ensuring the most appropriate measures are in place.
The steps for a successful SOX audit are as follows:
- Reviewing the internal controls and procedures to evaluate the risk level.
- Materiality analysis for the balance sheet and profit and loss statement.
- Identifying and documenting the SOX controls that prevent and detect incorrect transaction records.
- Fraud risk assessment.
- Testing of critical SOX controls.
4. SOC Compliance Audit
SOC is a voluntary compliance standard for service organizations. Specifies how organizations should manage customer data based on availability, security, confidentiality, processing integrity, and privacy. Each organization designs its controls depending on the specific business practices.
There are two types of SOC compliance:
- SOC 1: It describes an organization’s systems and whether they comply with relevant trust principles.
- SOC 2: Focuses on the operational efficiency of the systems.
SOC compliance audit is important because it verifies if an organization maintains a high level of information security. By strictly complying with the regulations, companies ensure that they handle sensitive information responsibly to prevent data breaches and loss.
A SOC audit happens every six months. A SOC compliance audit comprises an assessment of the following five trust principles:
- Security to protect information and systems against unauthorized access.
- Availability to ensure systems are available for use to meet the company’s objectives.
- Processing integrity to check if the system processing is complete, valid, accurate, timely, and authorized.
- Confidentiality to assess is information is designated as confidential.
- Privacy to check that personal information is collected, used, retained, disclosed, and disposed of according to an organization’s objectives.
5. ISO Compliance Audit
International Organization for Standardization (ISO) represents the best practices across various operational areas. Covers crucial areas such as service quality, IT security, quality management, health, safety standards, and environmental impact. ISO compliance isn’t mandatory, but organizations that achieve an ISO certification have attained “a formula for doing something in the best way.”
ISO compliance audits are crucial as they keep organizations on track with respect to operating on international standards to enhance their reputation regarding their approach to business. The audits matter because they are an efficient path that drives lasting improvements in critical business areas.
The exact steps of conducting the audit differ depending on whether the auditor is assessing the information security management system or data on product safety. Generally, an ISO audit entails:
- Checking the systems and processes to verify their proper functioning as per the ISO standard.
- Reviewing the documentation to ensure the practices conform to the management principles.
- Evaluating the roles and procedures.
6. NIST Compliance Audit
The National Institute of Standards and Technology (NIST) requires organizations to adhere to specific security standards and best practices. The NIST regulations protect data used by the government and its contractors. While the guidelines target government agencies, other organizations benefit from the principles.
NIST compliance depends on the NIST framework in question. The audits are crucial because they ensure an organization has a clear security framework and requirements to protect itself against growing cyber security threats. An audit identifies the loopholes that threaten an organization’s security program. The compliance audit entails comparing the security systems and standards to the NIST compliance standards.
7. GDPR Compliance Audit
The General Data Protection Regulation (GDPR) is a regulation that requires an organization to handle personal data as defined in the law correctly. Establishes specific obligations that organizations must follow to limit how they collect, manage, use, store, disseminate, and protect personal data. The GDPR is the most potent global data privacy law in use today.
The importance of a GDPR compliance audit is to help assess an organization’s compliance level to avoid hefty penalties. An organization also identifies vulnerabilities in its network through an audit, which threatens customers’ data. Auditors also share knowledge for various improvements and future training. A GDPR compliance audit happens at least once a year and entails the following:
- Conducting an inventory of all the data in an organization.
- Reviewing all third party connections and what data is exchanging.
- Assessing who accesses the data and how they use it.
- Checking how the data is processed.
8. CCPA
CCPA refers to the California Consumer Privacy Act that aims to combat the numerous data breaches in Big Tech. By implementing the requirements outlined in the Act, companies reduce the incidents of data breaches arising from poorly defined access controls and privacy management.
CCPA compliance audits allow companies to demonstrate they care about their customers’ data. Through an audit, a company proves that employees understand the company’s privacy policy and won’t do anything to put customer data at risk of a breach. That creates more trust with customers, expands operations, and dramatically cuts down data privacy liability.
The process verifies the following elements:
- Right to disclosure and access.
- Right to contact information.
- Opt out of Data Sales and Marketing.
- Right to fair treatment.
- Period privacy policy updates.
Different Types of Compliance Audits and Why They Are Important Conclusion
Compliance audits ensure companies keep up with various regulations and requirements to meet the set standards, internally or externally. Depending on your company’s industry, it’s crucial to check that it meets the necessary cybersecurity requirements.
