Purpose/Benefits of HR audit 1. To insure the effective utilization of an organizations human resources. 2. To review compliance with a myriad of administrative regulations.

3. To instill a sense of confidence in management and the human resources function that it is well managed and prepared to meet potential challenges. 4. Motivation of the HR personnel. 5. Find out the problems and solve them smoothly. 6. Provides timely legal requirement. 7. Sound Performance Appraisal Systems. 8. Systematic job analysis. 9. Smooth adoption of the changing mindset. 10. To maintain or enhance the organizations and the departments reputation in the community. 11. To perform a due diligence review for shareholders or potential investors/owners. 12. To find out the proper contribution of the HR department towards the organization. 13. Development of the professional image of the HR department of the organization. 14. Reduce the HR cost.

The audit process The HR audit process is conducted in different phases. Each phase is designed to build upon the preceding phase so that the organization will have a very strong overview of the health of the HR function, at the conclusion of the audit. These phases include: Pre-Audit Information: This phase involves the acquiring and review of relevant HR manuals, handbooks, forms, reports and other information. A pre-audit information request is forwarded to the client who compiles the necessary information for review by auditors. Pre-Audit Self-Assessment: In order to maximize the time spent during subsequent portions of the audit, a pre-audit self-assessment form, if sent to the client can be of use. The self-administered yes/no questionnaire asks a number of questions about current HR policies and practices. The completion of this self-administered questionnaire allows auditors to identify key areas for focus during the HR audit. On-site Review: This phase involves an on-site visit at the client's facility interviewing staff regarding HR policies and practices. A very in-depth HR audit checklist is completed. Records Review: During the on-site visit, a separate review is conducted of HR records and postings. Employee personnel files are randomly examined as well as compensation, employee claims, disciplinary actions, grievances and other relevant HR related information are checked. Audit Report: The information gathered is used to develop an HR audit report. The audit report categorizes action needs into three separate areas. The areas that are urgent and important (UI), not urgent needs but important (NUI), not urgent but not important needs (NNI)), and important opportunities needs (IO). As a result of this scheme of classification, managements can prioritize their steps. The critical areas The comprehensive HR audit covers all areas of HR management like recruitment practices, training and development, compensation and benefits, employee and union relations, health, safety and security, miscellaneous HR policies and practices-welfare, strategic HR issues, manpower planning/budgeting.

Besides classifying needs in each of the above areas, the HR audit also cites relevant laws, cases and research to support the recommendations.

Preparation for an audit Auditor engagement: If external firm carrying out the audit, it is preferable to set terms in writing defining and agreeing on scope .If using internal resource it is better to appoint them formally with clarity on scope and select persons who are non political or those who are not high on hierarchy. Also, if internal persons are auditing there must be training in auditing. Documents, manuals, handbooks, forms and reports auditor must have access to relevant information contained in employee files and other confidential documents of the organization. Auditors must be given unrestricted access to records, once they sign agreement for confidentiality. Data gathering: Completion of a self-assessment questionnaire significantly expedites the audit process and allows for better audit planning. On-site access: The on-site portion of the audit is the most critical. Using audit findings How does an organization use HR audit results? Since the HR audit results are classified, an important aspect is already taken care of. Critical needs should be the first ones to be addressed. Organizations generally have three options for dealing with audit results. * Use the HR audit as a blueprint or action plan for addressing HR needs. * Address as many needs as possible using the organization's internal expertise and resources. * Contract out those need areas where internal expertise and resources are not available or do not fit in the core competencies of the organization. An HR audit is much like an annual health check. It can perform the same function for the organization. An audit is a means by which an organization can measure where it currently stands and determine what it has to accomplish to improve its HR functions. It involves systematically reviewing all aspects of human resources, usually in a checklist fashion, ensuring that the government regulations and company policies are being adhered to. The key to an audit is to remember that it is a tool to discover and not to test. There will always be room for improvement in every organization. Where a human resource associate comes and makes sure that your employee files are up to date