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HR AUDIT SERVICES
An HR Audit is like an annual health check-up, it plays a vital role in instilling a sense of confidence in the Management and the HR functions of an organisation.
The purpose of an HR Audit is to recognize strengths and identify any needs for improvement in the human resources function Third party audit for HR process is always recommended to growth of Organisation. A properly executed Audit will reveal problem areas and provide recommendations and suggestions for the remedy of these problems. Some of the reasons to conduct such a review include:
Maintaining or enhancing the organization and the department’s reputation in the community
Performing “due diligence” review for shareholders or potential investors/owners
Establishing a baseline for future improvement for the function
It is necessary to take a look at these and other questions..
- Does the organisation regularly forecast the supply of and demand for employees in various categories?
- Do job analyses exist for all positions in the organization?
- Are all potential sources of recruitment identified and evaluated?
- Are measurable selection criteria developed and used while filling up jobs?
- Do effective training and development programmes exist?
- Is there a performance evaluation system that helps assess past and potential performance?
- Is the remuneration programme designed to motivate employees?
- Is the plant unionised?
- Does a grievance procedure exist?
- Does the organisation have high quality of work life?
- Does the HRM practice contribute to organisational effectiveness?
- Does the management underestimate the capacity of HRM to contribute to organizational effectiveness?
Approaches of HR Audit
Audit is a tool to judge organizations performance and effectiveness of HR management. Personnel Audit refers to an examination and evaluation of policies, procedures and practices to determine the effectiveness of personnel management.” It is an analytical, investigative and comparative process.
The following approaches are adopted for purpose of evaluation:
1.Comparative approach
2.Outside authority approach
3.Statistical approach
4.Compliance approach
5.Management by objectives (MBO) approach.
1. Comparative Approach: Under this approach auditors identify one model company and the results obtained of the organisation under audit are compared with it.
2. Outside Authority Approach: In outside authority approach a benchmark is set to compare own results. A standard for audit set by outside consultant is used as benchmark.
3. Statistical Approach: Under statistical approach the statistical information maintained by the company in respect of absenteeism, employee turnover etc. is used as the measures for evaluating performance.
4. Compliance Approach: Under compliance approach the auditors make a review of past actions to determine to see whether those activities are in compliance with the legal provisions and in accordance with the policies and procedures of the company.
5. Management By Objectives ( MBO) Approach: Under MBO approach specific targets are fixed. The perform¬ance is measured against these targets. The auditors conduct the survey of actual performance and compare with the goals set.
A. Statutory Compliance Audit .
| Sl. No. | Reference | Information | Document |
| 1 | Contract Labour Regulation Act, 1970 | CLRA lincese number | Lincese Copy |
| 2 | Employee Provident Fund Act | EPFO Code number | EPFO Registration Copy |
| 3 | Employees’ State Insurance Corporation | ESIC Code Number | ESIC Registration Copy |
| 4 | Contract Labour Regulation Act, 1970 | CLRA Conditions of license | Lincese Copy |
| 5 | Contract Labour Regulation Act, 1971 | Work hours | Muster Roll / Wage Register |
| 6 | Contract Labour Regulation Act, 1972 | Advance Paid | Advance Register / Wage Register |
| 7 | Contract Labour Regulation Act, 1973 | Fines imposed/paid | Fines Register/ Wage Register |
| 8 | Contract Labour Regulation Act, 1974 | Proof of wage deductions | Deductions Register / Wage Register |
| 9 | Contract Labour Regulation Act, 1975 | Seperation proof | Service letter (upon separation) |
| 10 | Contract Labour Regulation Act, 1976 | Full and final settlement | Full and final settlement statement |
| 11 | Minimum Wages Act | Overtime paid | Overtime Register / Wage Register |
| 12 | Minimum Wages Act | Compliance State prescribed minimum wages | Wage Register |
| 13 | Minimum Wages Act | Submission of Annual returns Under MWA | Last Return copies |
| 14 | Payment of Wages Act | Payment of salary on time | Wage Register / Salary Slips |
| 15 | Payment of Wages Act | Salary by cheque/DD/ transfer | Wage Register / Salary Slips / Bank Statement |
| 16 | Payment of Wages Act | Submission of Annual returns Under PoWA | Last Return copies |
| 17 | Employees’ Provident Fund & Misc. Provisions Act | EPF contributions | Contribution Challan |
| 18 | Employees’ Provident Fund & Misc. Provisions Act | Emigrant PF Contributions | ECR Copy / IW Returns |
| 19 | Employees’ Provident Fund & Misc. Provisions Act | UAN Availability | UAN number |
| 20 | Employees’ Provident Fund & Misc. Provisions Act | EDLI Exemption | Exemption letter/ copy/ certificate |
| 21 | Employees’ Provident Fund & Misc. Provisions Act | EDLI return | Form 7IF |
| 22 | Employees’ Provident Fund & Misc. Provisions Act | Adequate Insurance | Insurance copy |
| 23 | Employees’ State Insurance Corporation | ESIC Contributions | Contribution Challan |
| 24 | Employees’ State Insurance Corporation | Contribution History | Register of challans |
| 25 | Employees’ State Insurance Corporation | Accident history if any | Accident report |
| 26 | The Payment of Bonus Act | Allocable Surplus | Form A – Allocable Surplus |
| 27 | The Payment of Bonus Act | Set on Set off | Form B – Set on Set off |
| 28 | The Payment of Bonus Act | Payment of Bonus | Form C – Bonus Register |
| 29 | The Payment of Bonus Act | Bonus Returns | Form D- Bonus Returns |
| 30 | The Payment of Bonus Act | Adequate payment of Bonus | Bonus Register |
| 31 | The Payment of Gratuity Act | Proof of Settlement of Gratuity | Settlement document |
B. Non Compliance Audit.
| Sl. No | Audit |
| 1. | Performance Management Audit |
| 2. | Recruitment Audit |
| 3. | Recruitment vendor Audit |
| 4. | Increment and Appraisal Audit |
| 5. | Policy or Handbook Audit |
| 6. | Wage and Hour Practices Audit |
| 7. | Exemption Audit |
| 8. | Job Description Audit |
| 9. | Safety Audit |
| 10. | Hiring Process Audit |
| 11. | Training and Development Audit |
| 12. | Compensation Audit |
| 13. | Background verification Audit |
| 14. | Process Audit |
