Yes, internal auditors regularly perform compliance audits to ensure the organization adheres to internal policies, procedures, and external laws or regulations. These audits are a core component of the internal audit function, focusing on identifying risks and validating that controls are in place to prevent legal, financial, or operational issues.
Compliance is undoubtedly a stakeholder in the audit process, and they also may serve as part of the audit team, but the two functions are fundamentally different. It's a system of checks and balances assuring every policy in the company is followed, whether from a legal or a corporate point of view.
Compliance audits are performed by: Internal auditors: Employees within the organization tasked with ensuring internal compliance with policies and regulations. External auditors: Independent third-party firms or individuals hired to provide an unbiased assessment of the organization's compliance.
Internal Audit Types
Key Differences Between Compliance Officers and Internal Auditors. Compliance Officer: Focuses primarily on ensuring adherence to external laws, regulations, and industry standards. Internal Auditor: Concentrates on evaluating and improving internal controls, processes, and risk management.
The role of the Chief Compliance Officer (CCO)
The Chief Compliance Officer has evolved from a policy custodian into a governance leader, involved in strategy, oversight, and the orchestration of systems that make compliance and ethics operational at scale.
A compliance audit is an impartial review of an organization's activities and records to verify adherence to internal and external policies, standards and regulations. It can cover areas such as cybersecurity, data privacy, financial reporting and health and safety.
The “5 P's of Internal Audit” includes 5 video-clips presenting testimonials from audit managers on the topics of Plan, Perform, People, Profile and Product.
The Three Lines of Defense Model addresses these weaknesses by clearly defining roles: the first line owns and manages risk in day-to-day operations, the second line provides oversight and guidance to ensure risks remain within appetite, and the third line offers independent assurance through internal audit.
Only licensed professionals or those specifically exempt from licensure can conduct workplace investigations in California. Engaging unlicensed individuals may expose employers to legal liability and invalidation of the investigation.
How to conduct an internal compliance audit + checklist
Can internal auditors audit their own work? : No. To remain unbiased, auditors should not review areas they are directly involved. Independence is key to providing a fair and objective audit.
What happens during an audit? Internal audit conducts assurance audits through a five-phase process which includes selection, planning, conducting fieldwork, reporting results, and following up on corrective action plans.
Internal Auditor Job Description
Types of Internal audits include compliance audits, operational audits, financial audits, and an information technology audits.
Compliance audits and internal audits, though distinct in focus, are both essential for maintaining a robust risk management framework. While compliance audits ensure that your business meets regulatory requirements and builds external trust, internal audits drive operational efficiency and continuous improvement.
The audit may be conducted by either Immigration and Customs Enforcement (“ICE”) or Homeland Security Investigations (“HSI”), a division within ICE. Those agencies can also audit the I-9 materials of persons who are no longer working from the employer.
AI will absolutely change compliance roles, but “obsolete” is unlikely - especially in tech/fintech - because so much of the job is judgment + stakeholder wrangling + accountability.