How to Know Your Compliance Program Is Audit-Ready: A Checklist
An audit-ready compliance program is characterized by a strong culture of compliance embraced at all levels, an empowered compliance team with adequate resources, a proactive approach to risk management, and adherence to a detailed checklist including establishing risk-based processes, assigning and documenting control ownership, and training staff through education and mock scenarios to confidently handle regulatory inquiries.
Building an audit-ready compliance program means your firm is prepared to meet any document request or regulatory inquiry with ease. Here are the key signs and a checklist to help you determine if your compliance program is truly audit-ready.
Signs Your Compliance Program Is Audit-Ready
- Culture of Compliance: Everyone on the team promotes a culture of compliance. Compliance is celebrated, not feared. All employees feel empowered to discuss the basics of robust regulatory compliance. This openness extends to the boardroom, where compliance has a seat at the management table and is included in early business planning.
- Empowered Compliance Team: Chief Compliance Officers (CCOs) and other compliance professionals have the autonomy and authority to do what they need. Leadership supports requests for necessary resources.
- Proactive Approach: The program is proactive, not reactive. A healthy compliance culture ensures the program is adequately resourced in terms of staffing, training, technology, and systems.
Audit-Ready Checklist
Walking through this checklist will help you identify deficiencies in your program. Once all boxes are checked, your firm can be considered audit-ready.
1. Establish Your Compliance Processes
- Design and implement a compliance program that addresses your firm’s risks
- Inventory and prioritize/rank the firm’s risks
- Identify controls to help mitigate those risks
- Create procedures to execute the controls
- Perform your Annual Review, as per SEC requirements, to ensure controls are appropriate and functional, and to identify any new risks
2. Follow the Process
- Assign controls to owners responsible for executing at a defined frequency
- Establish transparency in the completion of assignments
- Retain evidence of controls testing
3. Train Your Team
- Educate colleagues on compliance processes
- Run mock scenarios to coach responses to examiner’s inquiries ("no" is a complete sentence)
- Ensure the team is confident in its ability to produce records/evidence as requested
4. Produce Evidence
- Have the capability to identify and extract relevant, in-scope records efficiently, accurately, and completely, with supporting evidence
- Produce statistics and summaries of trends (where exceptions are occurring), which inform the strengthening of your control framework