HR Audit

HR audit is the verification of availability of all mandatory HR documents and auditing of HR documents for their compliance with the current legislation of the Russian Federation and internal requirements of the company. 

HR audit belongs to voluntary types of audit. Its performance is not compulsory by law. An HR audit may be initiated either by the head of the HR department or by the head of the organisation.

The objective of an HR audit is to reduce the risks of violation of the applicable labour legislation and to increase the efficiency of HR management.

According to the method of conducting the audit, it is divided into internal and external.

Internal audit is the inspection carried out in-house by the company’s specialists. 

This type of audit is expedient where it is necessary to analyse a small section of personnel records or a set of documents on a certain situation. A disadvantage of this type of audit is the need to transfer the available human resources from their current job tasks to auditing and to delegate their functional responsibilities to other specialists. This may lead to an increase in the workload of other professionals involved in HR accounting. If the scope of the audit is expected to be significant, it may require more time and the involvement of more than one internal specialist, resulting in a decrease in the efficiency of the company’s HR accounting process.

In case of external audit, third-party specialists are involved in verification.

It is advisable to use this type of audit to perform an independent assessment of the current state of HR accounting. A specialized company has the opportunity to engage a team of experts for the auditing, which will allow it to conduct an extensive and comprehensive analysis of the company’s HR accounting system without interfering with internal processes.

The audit of personnel records management is useful in cases where the company faces “personnel problems” manifested not only in difficulties with the staff but also by improper execution of the necessary HR documentation.

Stage 1. Clarifying the task. Studying the situation.

This stage includes the following procedures:

• meeting with the management. Clarification of the task at hand. The manager expresses his/her opinion on the problems in the company’s activities related to the quality of HR accounting;
• analysis of the situation, of the alarming and concerning threats and risks; analysis of the established problems;
• assigning responsible professionals on the part of the company to support the team of auditors;
• setting the auditing timeframe. It mostly depends on the number of employees and the type of activity. The timeframe may vary from several days to several months.

Stage 2. Approving the list of documents to be audited

The law does not provide for the uniform list of documents that should be maintained in each organization. Various legal acts contain references to mandatory keeping of certain registers, orders and other documents. Depending on the industry in which the company operates, it is necessary to draw up a list of documents which the organization shall maintain in compliance with legal acts.

The list of mandatory documents includes:

• staffing table (T-3) with an order of approval;
• employment contracts and financial responsibility agreements;
• orders on hiring, transfer to another position, granting leave, incentives, sending on a business trip, termination of a labour contract and other personnel orders;
• employee data cards (N T-2 form);
• leave schedule;
• shift schedules (in case of shift working model);
• time sheets;
• Internal Code of Labour Conduct (ICLC);
• regulation on the protection of employee personal data and consent to the processing of personal data;
• employment record books if they are kept in hard copy;
• employment record books (and employment record book inserts) register;
• account book for employment record book forms (Appendix No. 2 to the Decree of the Ministry of Labour of the Russian Federation No.69 dated 10/10/2003);
• job descriptions;
• local regulations (regulations on labour compensation, regulations on bonuses, regulations on business trips, etc.);
• results of the special assessment of working conditions (Art. 212 of the Labour Code of the Russian Federation, Federal Law No.426-FZ dated 28/12/2013).

This is not an exhaustive list of the required HR documents. The company may keep the registers of personnel data files, leaves, business trips, certificates of incapacity for work, issued certificates, verification of the military registration status, compulsory medical examination of employees, etc.

Stage 3. Inspection and analysis of documents

First, the availability of HR documents is verified. The submitted documents are then analysed from the point of view of their compliance with legislative requirements. All documents shall be checked for signatures of the authorized person, authorizations, registration numbers, notes of the employee’s familiarization with the order, and execution notes.

Much attention is paid to relations between documents. For instance, in employment contracts, the job title and the salary shall correspond to the approved staffing table and the hiring order, etc.

The employees shall be familiarized with the results of the performed special assessment of working conditions; the working conditions shall be entered into the employment contract (this is a mandatory labour practice). If harmful factors are identified at workplaces, the report shall contain additional guarantees for employees working at such workplaces, e. g. additional leave, hazardous-duty pay, reduced working hours, etc. In this case, it is necessary to check whether the employer provides these guarantees.

Stage 4. Execution of the HR audit report

The law does not provide for the form of report on the audit of HR documentation. The report shall be compiled in any format developed by the organization which conducts the HR audit. It shall contain the data on the current state of the personnel records management, on identified deficiencies, on the risks of keeping the HR accounting system unchanged, on the recommended corrective measures.

The professionals at Sterngoff Audit employ the HR audit methods developed and approved according to our regulations. Due to the cumulative experience and substantive due diligence, we conduct the HR audit to a high standard.

The result of the HR audit performed by our company is the report that contains:

• the list of HR documents which are mandatory but not available in the company;
• the list of violations of the labour and/or other legislation identified in the documents;
• the list of violations identified in the personnel records management system, in the procedure for formalising the employment relations;
• the recommendations on the elimination of violations and the improvement of personnel records management efficiency.

Within the framework of the organization audit, we assess the state of business and the activities of key employees responsible for specific areas of work. The HR audit is conducted by an external employee who is unbiased and objective towards the company personnel and thoroughly inspects the HR documentation governing the employees’ labour activities.

Thus, the customer has a complete impression of the state of HR documentation in the company and of the identified risks presented as issues that need managing. Due to our recommendations, the customer obtains an efficient tool, enabling the company to manage these risks in order to mitigate them.

In order to determine the cost of the HR audit conducted by our company, you may submit the application via our web site or by e-mail info@sterngoff.com. We will contact you to provide the personalized quotation of the HR audit cost for your company.