For many community and health organisations, external compliance audits are a stressful experience. This usually comes down to a lack of preparation. Documentation hasn’t been organised properly, and the organisation’s last internal audit took place years ago. This introduces a large amount of uncertainty.
These circumstances are completely avoidable. With a little planning, you can pass your next external assessment, drastically reduce the stress involved, and preserve your professional reputation.
What Is an IT Compliance Audit?
An IT compliance audit is a special assessment designed to determine whether your digital technology adheres to relevant laws, regulations, and standards. There are two main types:
External Audits
An external audit is carried out by a qualified third party, and generally comes with much higher stakes attached. Failure may result in additional oversight, fines, or other penalties. If a client discovers that you have been noncompliant, particularly if your negligence is linked to a data breach that affected them personally, you could even be subject to lawsuits.
Internal Audits
Internal audits are carried out within your organisation. These can be performed at scheduled intervals or immediately before an external assessment. The purpose of an internal audit is to ensure that your organisation is compliant without the pressure of consequences. It allows you to remediate issues in a controlled environment.
Benefits of Compliance Audit Preparation
Performing an initial compliance audit to prepare for your external assessment is a clever strategy. It provides several key advantages:
- Reduced Risk: A preemptive audit allows you to identify and address gaps before the real thing, making it easier to pass. It also reduces your risk of other negative outcomes, such as data breaches and outages, by helping you improve your IT.
- Faster Audits: By conducting an internal audit, you build documentation that will be crucial during the external assessment. This makes the process smoother and faster.
- Stronger Relationships: Regular audits demonstrate to authorities, clients, and donors that you can be trusted to make responsible decisions that take everyone’s welfare into account. Over time, this strengthens relationships, improving your finances and professional reputation.
- Better Oversight: The internal audit process improves governance by providing clearer visibility into your IT infrastructure.
The Compliance Audit Checklist: What to Verify Before Your External Assessment
There is much to evaluate during an IT compliance assessment, which means it’s easy to make mistakes or miss crucial gaps. While preparing for your external compliance auditor, you may find the following checklist helpful for ensuring that everything’s in order.
Verify that:
Data Governance and Privacy
- All sensitive data is documented, including what is collected, where it is stored, and who has access
- Data classification is applied consistently across systems and storage locations
- Retention and disposal practices are documented and followed
- Privacy notices and consent processes are current and accurately reflect how information is used
- Third-party vendors handling personal data have signed data processing agreements with appropriate protections
- Current data handling practices are fully compliant with the Privacy Act
Access Controls and Identity Management
- A complete and current list of user accounts exists across all systems, including cloud platforms and third-party applications
- Access provisioning and deprovisioning processes are documented and followed consistently
- Former staff accounts have been disabled or removed
- Administrative privileges are limited to those with a documented business need and reviewed periodically
- Multi-factor authentication is enabled across all systems containing sensitive data
Security Controls and IT Governance
- Patch management records exist and demonstrate that updates are applied in a timely manner
- Endpoint protection is deployed across all devices accessing organisational systems and is actively managed
- Backup arrangements are documented, automated, and tested
- An incident response plan exists, has been reviewed recently, and is known to the staff responsible for executing it
- Network security controls are documented and have been reviewed within the past twelve months
Financial Management and Procurement
- Expenditure is documented, with supporting invoices and approval records for all material transactions
- Procurement decisions are documented in accordance with applicable thresholds and policies
- Acquittal processes for grant or funding agreements are complete, accurate, and supported by evidence
- Budget-to-actual variance is documented and explainable with reference to contemporaneous records
Policy and Procedure Currency
- All policies referenced in governance frameworks exist as current, version-controlled documents
- Review dates are recorded and policies have been reviewed within the period specified in the document itself
- Staff have acknowledged relevant policies in writing
- Procedures are documented in sufficient detail that a new staff member could follow them without additional guidance
Training and Awareness
- Training completion records exist for all mandatory programs (particularly privacy, security awareness, and role-specific compliance training)
- Onboarding training processes are documented and evidence of completion for recent starters is retained
- Training curriculum has been reviewed for currency and accuracy
Governance and Board Oversight
- Board and committee meeting minutes are complete, signed, and retained for the required period
- Decisions made between meetings are documented through an appropriate mechanism (e.g. email resolution, delegated authority records, or similar)
- Board reporting contains material information about compliance, risk, and financial performance
- Conflicts of interest registers are current and declarations have been obtained from all relevant individuals
Reporting Accuracy
- All compliance reporting submitted to funders or regulators in the past reporting period is supported by contemporaneous evidence
- Any material differences between reported and actual performance are documented with an explanation
- Reporting processes are documented so that they can be replicated consistently rather than depending on one person's knowledge
Using This Compliance Audit Checklist Effectively
Before starting, appoint an internal “compliance officer” and hand them a copy of this checklist. As you conduct the compliance audit, this person should go through the list one item at a time and ensure that each statement is true. If every single point can be answered with a firm “Yes”, then you can rest assured that you will likely pass the external audit.
If your internal auditors come across any gaps during the assessment, then they should take note of it and continue. Once the initial audit is complete, follow the remediation steps listed below.
Remediation Steps: How to Fix the Gaps
If gaps were identified during your internal audit process, follow these steps to address them:
Step One: Analyse Organisational Impact
First, identify the potential impact that each gap could have on your:
- External compliance audit
- Operational continuity
- Security posture
This step is crucial, as you will use this information to prioritise your remediation efforts.
Step Two: Develop a Strategy
Next, create a roadmap that outlines how you will address each gap. Set a clear priority list based on which problems are likely to cause the greatest issues. For instance, if your organisation is in breach of the Privacy Act or is missing essential security controls, this needs to be fixed quickly.
When building your remediation strategy, consider:
- Timelines
- Necessary resources and expertise
- Funding
Once your plan is complete, present it to key stakeholders for feedback. This helps you secure early buy-in, which is important for reducing change resistance. They may also provide some useful information.
Step Three: Prepare for Change
Before beginning your improvement efforts, there are a few things you must do in preparation:
- Backup All Data: Always complete and test a full data backup before touching your IT infrastructure. Errors occur more frequently than you might expect, and the last thing you want is to realise you’re missing weeks’ worth of data when it’s too late to fix the problem.
- Implement a Change Management System: Without a proper change management system in place, employees may resist any alterations to your digital environment. Explain what’s changing, why, and what it means for them. Provide a space for them to come to you with any questions or concerns they may have, and offer additional training where needed.
- Secure Your Organisation: Periods of change are when your organisation is at its most vulnerable, and threat actors will be very eager to take advantage of the opportunity you’ve provided them with. Implement some basic security measures, such as data encryption, and run threat scans both before and after your remediation efforts.
- Choose a Framework: Some organisations need a compliance framework to help them get started. If you’re using one, you should have an idea of which one you will choose at this point in the process.
Step Four: Implement Corrective Actions
Now, it’s time to begin implementing your changes. To ensure success:
- Work slowly and in phases, so you can stop to address any issues that occur
- Engage your legal team as needed, to verify that you’re complying with all legal and regulatory standards
- Document everything, to help streamline the external audit
Watch carefully for any signs that something is going wrong. If you notice any, stop and solve the problem before moving on. This will make the next step much easier.
Step Five: Monitor and Adjust
In the period immediately following your internal audit (and especially before the external audit has occurred), monitor your IT infrastructure and governance structures closely. Look for:
- Unexpected security risks
- Remaining compliance gaps
- Governance policies that are not consistently followed
- Missing documentation
If you notice any of these problems, this is your opportunity to fix them before your external audit.
Learn why most digital transformation initiatives fail (and how to prevent it from happening to you)
Find Your Biggest Compliance Gaps Before the Authorities Do It For You
Compliance auditing is a fact of life for community and health organisations. But it doesn’t need to be a stressful process. By carrying out your own audit first, you can ensure your organisation meets all necessary compliance standards ahead of time. You’ll pass the external one faster, with fewer questions, and be able to get back to your work.
Do you need an expert to look over your IT? We can identify any compliance gaps you might have missed, giving you time to address them before regulatory authorities discover them. Don’t take the risk. Get your IT audit now.
FAQs
What is an IT compliance audit?
An IT compliance audit is a structured, formal review of your digital environment to identify whether it is adherent to data protection regulations and other crucial standards. They can be performed either internally (by your own employees) or externally (by a third party).
Is compliance auditing mandatory?
External audits are often mandatory to retain funding, achieve certification, or prevent legal issues. Internal audits are technically optional, but it’s extremely beneficial to conduct one on a regular basis.
What are the benefits of an internal IT compliance audit?
The main benefits of an internal IT compliance audit are better preparedness for external audits, stronger security, reduced risk, and improved relationships with key third parties (such as clients and donors).
How often should we perform an internal compliance audit?
Ideally, internal compliance audits should be performed at least once per year or after any major changes have occurred within your digital infrastructure. It may also be beneficial to perform one immediately before an external audit, so you can catch any issues ahead of time.
What is a compliance audit checklist and how should it be used?
A compliance audit checklist helps keep you organised while conducting the assessment. This reduces your risk of missing issues.
We need help. Is it worth hiring a managed service provider?
Hiring a managed service provider to conduct a compliance audit on your behalf is a very good idea. These third-party companies staff experts in their fields, allowing them to see things that you may not.