Is your company undergoing a legal compliance audit? Understanding the documents you need can be the first step in preparing for an audit. Most legal compliance audits evaluate multiple areas of your organization to ensure you’re following the laws and regulations for your business and industry.
A legal compliance checklist typically includes areas such as:
- Corporate governance
- Environmental policies
- Employee health and safety
- Trade agreements
- Tax information
- Intellectual property
- Data security
An audit may evaluate all of these areas at the same time. Or it may focus on just one or two areas to assess your organizational operations and compliance in areas like HR or data security.
A company considering a merger or acquisition may be most concerned about corporate governance, trade agreements and tax status. On the other hand, the Department of Labor may request a legal compliance audit to ensure an organization isn’t violating labor laws.
Understanding the documents needed for legal compliance and best practices for legal compliance documentation can help your audit go smoothly. Know what to expect when preparing for audit processes to ensure legal compliance.
What Documents Do Auditors Typically Request during a Legal Compliance Audit?
Necessary documents may vary, depending on the auditor, the type of audit and the industry.
Some of the documents you may be asked to provide during a legal compliance audit include:
- Certificate of Incorporation
- Organization by-laws
- Corporate structure
- Board of Director meeting minutes
- Tax filing status (federal, state, and local)
- Correspondence from the IRS
- Regulatory compliance paperwork
- Government grants and contracts
- Patents, trademarks, copyrights and other documents related to intellectual property
- Public relations and communications policies
- Human resource handbooks
- Department of Labor signage
Follow These Documentation Best Practices during a Legal Compliance Audit
Following these five steps when preparing for an audit can help ensure your audit goes smoothly.
1. Store documentation consistently and as it becomes available.
Preparing for an audit should actually begin long before you know the audit is coming. Store documents and files safely and securely as soon as they come into your possession to begin building a virtual paper trail.
A virtual data room makes it easy to store and retrieve files, manage documents and control access for enhanced security within your organization.
2. Organize files in a consistent manner.
Documentation should be easy to find, with consistent naming conventions for files and a filing system that makes sense to those within your organization and to third-party auditors.
3. Make sure documentation is comprehensive.
It’s the auditor’s job to look at the finer details of your organizational processes and procedures. The more in-depth your documentation, the fewer questions they will have. Comprehensive documentation can speed up the process and encourage auditors to look favorably upon your organization.
4. Ensure the accuracy of your documentation.
Having the correct documentation accessible and properly filed can help your legal compliance audit go smoothly. But you also want to ensure the documentation is accurate and matches your company’s real-world best practices. After all, your auditors will seek proof that your organization follows the best practices outlined in your documentation.
For this reason, your file management system should make it easy to change documentation as processes and procedures change, so your documentation is always up-to-date.
5. Ensure data security and compliance.
Along with ensuring adherence to labor laws, proper following of corporate governance regulations, and compliance with environmental, health and safety protocols, a legal compliance audit often investigates a firm’s cybersecurity practices, compliance and security.
Depending on your industry, you may have to follow strict security protocols, such as HIPAA regulations in the healthcare industry. Whatever your industry, your auditors may evaluate the level of encryption you use for data storage, your digital rights management system, and how well you mitigate the risk of cyberattacks on a daily basis.
Using a virtual data room helps you control access to your organization’s critical data, including customer information and financial data.
Data Security Matters during a Legal Compliance Audit
During a legal compliance audit, the security of your data remains a top concern. With outside hands on your files, you’ll want to be sure your audit management software lets you control who can access the files. It should also record documentation of who has viewed or edited the files, leaving a proverbial paper trail for reference.
You should be able to customize permission levels and even require a signed non-disclosure agreement (NDA) before enabling third-party auditors to view or download documents.
A virtual data room with digital rights management (DRM) gives you the capability to revoke access to documents even after they’ve been downloaded, thereby protecting the integrity of your data and your company’s intellectual property even after the audit is complete. As auditors evaluate your security methods, they will see that your virtual data room helps your organization maintain security and compliance at all times.
How the Right Audit Management Software Can Help in Preparing for Audit Processes
When your company faces a legal compliance audit, your audit management software can make the difference between whether you pass or fail. Maintaining easy access to audit documents while ensuring their security can help your audit go smoothly, saving your company time and stress.
Having access to documentation information through secure audit management software can keep your organization’s critical information secure while giving auditors the data they need to do their job.