Compliance Audit

While internal management is responsible for daily operations, a Compliance Audit must provide an independent layer of assurance to the board of directors and the audit committee. Internal reviews often focus on operational efficiency and adherence to corporate policy, whereas a federal-facing compliance review ensures the entity is prepared for the scrutiny of outside examiners. We advise on the jurisdictional triggers that necessitate these reviews, helping firms navigate the specific mandates imposed by the Sarbanes-Oxley Act, environmental codes and specialized trade regulations.

A robust audit is a central pillar of an integrated GRC strategy. It provides the empirical data needed to evaluate whether the organization's risk management protocols are effectively mitigating known threats. By aligning the audit scope with the company's specific regulatory exposure, the board can make informed decisions regarding capital allocation and strategic growth. This integration ensures that compliance is treated as a core business function rather than a peripheral administrative task, thereby protecting the total mix of information available to stakeholders.

The ultimate goal of any compliance review is to achieve a state of enforcement readiness. This means that should a federal agency initiate an inquiry, the organization can produce a documented history of its efforts to identify and fix non-compliant behaviors. Regulators are far more likely to grant cooperation credit to entities that have an established record of self-auditing. We work with your internal teams to ensure that your audit documentation is legally defensible and prepared for potential jurisdictional review.

The audit begins with a comprehensive risk assessment that identifies the legal and operational threats unique to the company's industry. Factors such as geographic footprint, transaction volume and the complexity of the regulatory environment are analyzed to create a risk universe. Our firm assists in refining these assessments, ensuring that the audit plan is sufficiently aggressive to identify hidden vulnerabilities that a standard review might overlook.

Once the risk universe is defined, the audit focuses on identifying specific compliance gaps where the current internal controls fail to meet the required federal standard. This may include a lack of employee training, insufficient documentation of high-value transactions or the absence of proper oversight for external agents. By pinpointing these triggers early, we help organizations implement corrective measures before the gap results in a material breach of the law and subsequent regulatory inquiry.

A risk-based audit also evaluates the overall health of the control environment. This involves testing whether the policies and procedures established by management are being followed in practice. If a control exists on paper but is routinely ignored by staff, it creates a material exposure. We provide the clinical legal analysis needed to evaluate the tone at the top and ensure that your compliance culture is reflected in the actual day-to-day operations of the firm.

Transactional testing involves selecting a statistically significant sample of business activities and auditing them against the relevant regulatory requirements. For example, in an anti-corruption audit, we examine payments to foreign officials or agents to ensure they are properly documented and serve a legitimate business purpose. This level of forensic detail is essential for uncovering the types of irregularities that typically initiate a federal investigation and lead to forced restitution.

In the digital age, compliance is heavily dependent on the integrity of Information Technology controls. An audit must evaluate who has access to sensitive data and whether that access is monitored according to federal privacy standards. We audit these access protocols and the underlying system metadata to identify unauthorized entries or attempts to bypass internal security measures. This ensures that your data governance is as robust as your operational policies and adheres to the highest standards of regulatory compliance.

Standard document reviews are often insufficient to capture the true state of compliance. Direct interviews with key personnel and the observation of business processes allow auditors to identify informal practices that may bypass established controls. We provide the incisive insight required to conduct these interviews in a way that is professionally balanced yet effective at identifying systemic risks that have been hidden from management or the board of directors.

A corrective action plan must address the root cause of a compliance failure, not just the symptom. Whether the issue was caused by a lack of resources, poor training or intentional misconduct, the remediation must be tailored to prevent a recurrence. Our firm assists management in drafting these plans, ensuring they are both operationally feasible and meet the strict requirements of federal regulators who may review the record during a future investigation.

Once a corrective action is implemented, the audit function must perform follow-up testing to verify that the fix is working. This is a critical step in maintaining institutional integrity. If the re-testing fails, it indicates that the initial remediation was insufficient, necessitating a more aggressive intervention. We oversee this verification process to ensure your remediation logs reflect a genuine improvement in the control environment and satisfy the audit committee's expectations.

No audit can eliminate all risk. The final stage of remediation tracking involves reporting the residual risk, which is the risk that remains after controls are implemented, to the audit committee. This ensures that the board of directors is fully informed and can make a conscious decision to accept or further mitigate the remaining exposure. This transparent reporting is a cornerstone of effective corporate governance and protects directors from allegations of oversight failure or breach of fiduciary duty.

Under federal law, standard business audits are generally not privileged. However, if a Compliance Audit is conducted at the specific direction of legal counsel to provide legal advice regarding the company's liabilities, it may be protected. We provide the authoritative oversight needed to structure these privilege-sensitive reviews, ensuring that the organization can identify its risks in a confidential environment without creating an unprotected evidentiary trail for adverse parties.

The documents, data and communications collected during an audit must be handled with the same care as evidence in a courtroom. If a federal agency initiates a review, the organization must be able to produce a clean and complete audit trail. Any gaps in the record or evidence of data destruction can lead to catastrophic spoliation charges and obstruction of justice claims. We help our clients implement rigorous evidence preservation protocols that secure the integrity of the audit findings and support enforcement readiness.

When auditing international operations, privilege and evidence preservation must be balanced against local data privacy laws. The transfer of audit data across borders can trigger a separate set of regulatory violations if not managed with absolute precision. We coordinate the logistics of international audits to ensure that the preservation of evidence for a US investigation does not create new liabilities in foreign jurisdictions or violate consumer protection standards.

FCPA audits focus on the accuracy of books and records and the adequacy of internal accounting controls related to foreign operations. These reviews require a deep dive into third-party due diligence and the monitoring of high-risk transactions in jurisdictions prone to corruption. We provide the forensic oversight needed to identify red flags in your global supply chain, ensuring that your international growth does not result in a federal indictment or a significant loss of market access.

For entities in the healthcare sector, audits must address the security and privacy of Protected Health Information. A failure in HIPAA compliance can lead to massive civil penalties and a loss of consumer trust. Our audit protocols include a technical review of electronic health records and a clinical assessment of employee access patterns to ensure that your data governance meets the highest federal standards. This proactive approach is essential for maintaining the integrity of patient data and avoiding regulatory scrutiny.