AUDITING OF HR

FUNCTIONS.

Ashwinkumar P
A1
AJIM
HUMAN RESOURSE AUDIT- INTRODUCTION

 Human Resource Audit is a comprehensive method of objective and systematic

verification of current practices, documentation, policies and procedures
prevalent in the HR system of the organization
 Human Resource (HR) Audit is not only a tool for evaluating the personnel
activities of an organisation, but also an important aspect of the human resource
management. It is a great deal of attention from Human Resource Practitioners.
 OBJECTIVES OF HUMAN
RESOURSE AUDIT
  To conduct an independent, objective, systematic and critical examination of HR functions of
an organization.
 To assess the general environment and performance efficiency in HR department.
 To check for any deviations from standards and devise appropriate strategies and corrective
actions in HR related areas.
 To check for alignment of HR functions and organization’s overall practices and procedures.
 To measure statutory compliances of HR activities as per law and other relevant agencies.
 SCOPE OF HUMAN RESOURSE AUDIT
 HR Strategies and Policies:
The starting point of HRM audit should be an evaluation of HR strategies and policies and the way these
are in tune with those of the organization. For formulating HR strategies and policies, it is essential that
the objectives of HRM functions are clearly defined. The audit may evaluate the extent to which various
HR strategies and policies have been formulated and what their qualities are.
 HRM Functions:
The major thrust of HRM audit is on evaluation and review of various HRM functions relating to
acquiring and employing human resources, developing human resources, compensation management,
integration and maintenance of human resources, and industrial relations.
 HR Compliance:
HR compliance refers to the adherence to various HR strategies and policies by line managers
and adherence to legal requirements.
 HR Climate:
Quality of HR climate has important impact on motivation, job satisfaction, morale, and
HUMAN RESOURSE AUDIT PROCESS

 Determining the Scope and Type of Audit:

Since HR is a very wide field, the company may either choose to conduct a comprehensive
review of all HR functions or it may decide to review a few specific areas as it deems necessary
 Determining the Audit Method:
HR audits are usually conducted by using a questionnaire that elicits information about the
relevant HR areas. The audit may also be conducted by interviewing managers and employees
of the HR department to analyze how well they have understood the company’s policies and
how efficiently these policies are being implemented.
 Data Collection:
This step includes the actual process of collecting data about the organization and its HR
practices. Information is collected by using the questionnaire and by interviewing relevant HR
personnel about the HR procedures and policies being used in the company.
 Setting the Standards:
To assess the efficiency of HR functions, the information collected has to be compared
with some pre-determined standards. These standards have to be pre-set and any
acceptable level of discrepancies should be specified clearly.

 Feedback about the Results:

After collecting information and comparing the results, the audit team summarises the
findings and provides feedback to the company’s HR personnel and senior management
in the form of an audit report.
The results of the audit should be discussed with the employees of the HR department so


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that they are made aware of the present condition of the HR functions in the company..
Develop Action Plans:
Once the results of the audit are out, this information should be used for improving the
working of the HR department. The findings of the audit should be categorised
according to order of importance: high, medium and low. The organization should
examine the areas of weaknesses as revealed by the audit and find ways to overcome
them.
HUMAN RESOURSE AUDIT –
ADVANTAGE
 HR audit helps the company to identify the areas where
improvement is required.
 It helps to ascertain the proper contribution of the HR department
towards the organization.
 HR audit facilitates the development of HR plans for the future
based on the current performance of the HR department.
 It helps to motivate the employees to perform better and boosts
their morale.
 HUMAN RESOURSE AUDIT –
DISADVANTAGE
It is very difficult to establish standards for HRA as in case of other fields of accounting
such as financial accounting or management accounting. Every organization uses its
own standards, and thus the HRA data of no two organizations can be compared.
HRA dehumanises the employees by evaluating them in monetary terms. Human
beings cannot be owned or used like machines.
 There is no model of HRA valuation that can be said to be ideal. Each model has many
practical drawbacks.
CONCLUTION

Human Resource (HR) Audit is not only a tool for evaluating the
personnel activities of an organisation, but also an important aspect of
the human resource management. It is a great deal of attention from
Human Resource Practitioners.
THANK YOU