Maximizing the Benefits of Compliance Audits

May 2nd, 2013 | By | Category: Auditing

The prospect of your facility undergoing a compliance audit is unlikely to evoke excited anticipation. There are certain things we do – such as going to the dentist or conducting compliance audits – because they benefit us in the long term. Despite often being viewed with dread, an audit is a valuable tool in a compliance management toolbox. An impartial evaluation of compliance programs is critical for a company to ensure it is meeting regulatory requirements. Perhaps more importantly, an effective audit will determine potential underlying, or root causes, for deficiencies, which is a necessary step to prevent reoccurrence of issues.

Therefore, once the decision has been made to conduct an audit, proper planning, preparation, and execution are essential to maximizing its benefits. While this article focuses on environmental compliance audits, the concepts discussed also apply to health and safety, management system, or other audits. In addition, the suggestions outlined are in the context of voluntary, internal audits and may not apply to audits conducted by regulatory agencies. The different goals and potential consequences of a regulatory agency audit may alter the approach and response of the entity being audited.


Defining the Scope

Planning and preparation are integral to conducting an effective audit. Time spent up front in these efforts can result in a more comprehensive audit and yield more meaningful results.


Regulatory Scope

The first place to start is to define the regulatory scope. Will you conduct a multi-media environmental compliance audit, or will you focus on a particular program? The answer will likely depend on what your motivation is for conducting the audit. Are you attempting to identify compliance obligations and establish a baseline, or do you suspect you have a problem program that needs attention? Whatever the answer, define the programs (e.g., solid and hazardous waste, pesticides, or air) and the related regulatory citations. This will eliminate any confusion over terminology or vague references and will help maintain focus toward the audit objective.

While most environmental compliance audit scopes will focus on U.S. Environmental Protection Agency and state environmental agency regulations, you may want to consider including related program areas that can be overlooked. For example, U.S. Department of Transportation hazardous materials regulations or U.S. Drug Enforcement Administration controlled substance regulations can align closely with environmental requirements at some facilities, so including them in the audit may be beneficial.


Physical Facilities

Once the regulatory scope of the audit is established, the physical scope of operations and facilities must be defined. If your company has multiple locations, should they all be audited? If you have not previously performed audits or several years have passed, consider auditing more than one location to identify potential systemic issues and avoid audit reports for multiple facilities that largely read the same. Then, initiate a full audit program once you have implemented any necessary programs across the company. Alternatively, if you are unsure of where to begin to understand your facilities’ compliance requirements, individual comprehensive evaluations may be more helpful.

Another potential consideration is whether to include all departments or business divisions in the audit. Large corporations or universities sometimes have distinct internal divisions with relatively independent management systems. It also is important to consider contracted operations, such as custodial, grounds-keeping, or food service, that may take place on site. It is becoming increasingly common for facilities to contract routine operations that have environmental compliance implications for which the facility remains responsible.


Extent of Review

With the regulatory scope of the audit established and the facilities to be included in the audit identified, a final scoping consideration is to determine the extent of locations and records to be reviewed. This will largely depend on the audit goals and the size and scope of the subject operations. For example, if this is the first audit of a newly acquired facility, you will likely want to conduct a thorough audit of the entire facility to identify all regulated activities and the associated level of compliance. If the facility has numerous similar operations, it may not be necessary to evaluate every space. While an auditor should inspect all unique operations, representative sampling may be appropriate for other areas. For instance, a large university may have 30 biochemistry research labs. An auditor should be able to effectively evaluate hazardous waste management practices and program implementation by inspecting 25 to 30 percent of labs with similar operations. While inspecting all of the labs may provide more examples of non-compliance, it is less likely to identify additional issues.

In addition, it may be appropriate to apply a similar representative sampling strategy for records review. A location with 50 aboveground storage tanks, each undergoing monthly inspections, the records of which must be maintained for three years, generates 1,800 inspection forms. It is probably not the best use of an auditor’s time to review all 1,800 tank inspection records. In these situations, applying a representative sampling strategy (e.g., random, block, or systematic) can be useful. When doing so, however, it is important to understand the facility’s system for conducting inspections. If different personnel or departments are responsible for conducting and documenting the inspections, it is important to review some records from each entity to identify potential procedural and program implementation differences.


Communication is Key

It is well-known that good communication is integral to the success of any program requiring coordination, input, or involvement of multiple people. Audits are no exception. Beginning with planning and continuing through implementation and reporting results, effective communication can dramatically improve the value and usefulness of audit results.

As “inspections” can unnerve employees, inform staff in advance that an audit will take place and explain the purpose and goals of the audit. Employees will be more likely to buy into the process if they understand it and feel a part of it. It may be helpful to frame the audit as an evaluation of how well environmental programs are being implemented, as opposed to a search for non-compliance. This may allow staff to feel less threatened, increasing the level of cooperation and candor with the auditor. In addition, let staff know what is expected of them. Do they need to prepare in advance, gather documents, or be available at a certain time? Let them know that an auditor may inspect their work area or interview them.

Finally, provide feedback to staff on the audit results. Of course, any areas with non-compliant situations will need to be notified so the issues can be addressed, but let everyone know how the facility faired. Even if you cannot share details, provide a high level summary of what the facility is doing well, as well as the opportunities for improvement.


What Not to Do

At the completion of the audit process, a report will be generated that outlines findings and opportunities for improvement. While everyone wants to receive a good report card, some of the actions that you may be tempted to take prior to or during an audit to limit the number of issues identified can be counterproductive to audit goals. While the ostensible goal of an audit is to identify instances of non-compliance, the more meaningful goal should be to discover the causes of non-compliance. An improper label on a container can easily be corrected, but if the lack of training that caused it is not identified, the issue is likely to occur again. An ineffective audit that fails to identify issues is simply a lost opportunity to improve programs.

Further, it is important to note that the discovery of non-compliance during an audit does not necessarily mean that someone is not doing their job. Non-compliance may be indicative of insufficient resources, staffing, equipment, training, or other site-specific factors. An audit can be an effective means of highlighting these needs.

With the goal of maximizing the benefits achieved through an audit, following are five actions to avoid:

  1. Don’t set unrealistic expectations for management. While we certainly want to strive for total compliance, it is unlikely that an environmental compliance audit will result in no findings. A manager expecting a clean report may not react well to one with even a few findings.
  2. Don’t “clean house” prior to the audit. For example, an auditor cannot learn much about hazardous waste management practices from a storage area that contains no waste. Eliminating a routine regulated activity from the site prior to the audit eliminates the opportunity to review it.
  3. Don’t conduct a pre-audit in advance of the scheduled audit and “fix” the issues identified. Allow the issues to come to light during the audit so the root causes can be ascertained and necessary resources obtained to implement sustainable corrective actions.
  4. Don’t avoid known problem areas and steer the auditor to solely compliant areas. To accurately assess the compliance status of a program, an auditor must see the bad along with the good.
  5. Don’t fail to prepare. A little preparation will allow you to make the most of an auditor’s time on site. As discussed above, share details of the audit program with employees so they know what to expect. Gather and organize records for review, set a tentative schedule, and ensure the auditor will have access to all necessary locations.

Conducting an audit in this very open and comprehensive manner may result in a report identifying more instances of non-compliance than desired. However, by initially identifying and addressing as many issues as possible, succeeding audits should yield significantly fewer findings. More importantly, you will feel more confident in the compliance status of your environmental programs.


About the Author

Rebecca A. Corbin, CHMM, CPEA is a project manager in the environmental, health, & safety (EHS) compliance group at O’Brien & Gere. She has an extensive background leading and conducting multi-media environmental, health and safety compliance audits for a variety of clients, including industrial facilities, municipalities, higher education institutions, and hospitals. She has participated in more than 90 audits with responsibility for auditing compliance with numerous federal, state, and local laws and regulations.

Photograph: Clematis by Claudia Meyer, Paris, France.


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2 Comments to “Maximizing the Benefits of Compliance Audits”

  1. Anhar Kramadisastra says:

    Very good directions and one of the article that should be read by EHS auditor.
    Finding root cause/s in a compliance audit is leading to a real continual improvement concept

  2. Praveen says:

    Nice way of putting things. Good insight. Thanks

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