HUMAN RESOURCE AUDIT

Like any other audit of the accounts of firm or organization, there was also a distinct
audit called Human Resource Audit. Human Resource Audit includes the Audit of an
organization when it was taken up comprehensively. Generally the purpose of Audit is
meant for verification of Accounts, Financial tatements, !udget, "rofit and Loss
Account, #uarterly, Half yearly, yearly !alance heets, tatements of Receipts and
"ayments , Ledger !ooks, $nvoices, %ills, &ouchers, $ncome ' ()penditure statements
etc. which are commonly relates to fiscal discipline. However, it is pertinent to note that
the *omprehensive Audit, %esides the a%ove aspects, must necessarily o%serve, verify,
analyze, identify, the aims and o%+ectives, goals, the policies, "rogrammes, "lans of an
organization, the way in which the firm spent money on Human Resources, Recruitment,
election, "erformance, ,elfare of the employees etc. in order to realize its goals, aims
and o%+ectives. -his item of work can %e termed as Human Resource Audit. trictly
speaking, it can %e regarded as an $nspection on Administrative aspects. $t aims at
looking the following items of audit.$nspection/
0. Regularities and $rregularities
1. Lapses and 2missions
3. Appropriations and 4is5appropriations
6. Advantages and 7is5advantages of the "olicies and "rogrammes
8. Responsi%ilities and $rresponsi%ilities
9. 2rganization and dis5organization.
:. 4anagement and 4is5management.
;. Gradation and de5gradation.
<. Rationalization and irrationalization.
0=. 7isciplinary *ontrol
Human Resource Audit can also %e termed as "ersonnel 4anagement Audit. $n $ndia,
the *omptroller and Auditor General of $ndia, will take up the Audit of the Accounts of
the &arious 7epartments, organizations, Government (nterprises, >ndertakings. His
Audit includes the Human Resource Audit. -he *AG will analyze critically the policies of
the schemes, its aims and o%+ectives, realities, how far the realization of the aims and
o%+ectives derived with special reference to the funds allotted, spent and e)penditure
%ooked on the Human Resources.
Human Resource Audit actually reflects on the e)amination and evaluation of the "lans,
"olicies, "ractices, "rocedures, "rogrammes, in order to determine the effectiveness and
efficiency and practica%ility of the Human Resource 4anagement and to have a check on
the work done %y the 4anagement whether the 4ission, &ision, 2%+ectives, goals,
"olicies, "rocedures and "rogrammes, have %een fully implemented to yield desired
results and achievement of the targets fi)ed. -his audit also makes suggestions for future
improvement on the 4anagerial "olicies and "rogrammes, on the strength of the
findings.outcomes derived from the previous Audit.
Objectives of the Human Resource Audit
-o review the performance of the Human Resource 7epartment and its relative
activities in order to assess the effectiveness on the implementation of the various
policies to realize the 2rganizational goals.
-o identify the gaps, lapses, irregularities, short5comings, in the implementation
of the "olicies, procedures, practices, directives, of the Human Resource
7epartment and to suggest remedial actions.
-o know the factors which are detrimental to the non5implementation or wrong
implementation of the planned "rogrammes and activities.
-o suggest measures and corrective steps to rectify the mistakes, shortcomings if
any, for future guidance, and advise for effective performance of the work of the
Human Resource 7epartment.
-o evaluate the "ersonnel staff and employees with reference to the "erformance
Appraisal Reports and suggest suita%le recommendations for improving the
efficiency of the employees.
-o evaluate the +o% chart of the Human Resource 4anagers, ()ecutives,
Administrative 2fficers, ()ecutive 2fficers, Recruitment 2fficers, whether they
have implemented the directives and guidelines for effective 4anagement of the
Human resources in their respective 7epartments.
Areas of Human Resource Audit
2%+ectives of the 7epartment in procuring ?ualified and suita%le employees,
training and developing them.
Formulation of suita%le compensation plans and reward system
$mplementation of effective *ommunication.
"erformance Appraisal
4aintenance of *ordial Relations
Resolve of *onflicts
Redressal of Grievances
>p5keeping 4orale
-he performances of the Human Resource 4anagement may have to %e evaluated with
reference to the aims and o%+ectives, "olicies framed %y the 4anagement of the firm.
(ach and every activity of the Human Resource 4anagement has to %e assessed %y
means of collecting information from the Human Resource personnel involved in the
aspect and after assessing the performance of the Human Resources 7epartment
personnel, an ela%orative Audit Report on Human Resource 4anagement and "olicies
may have to %e prepared and furnished. -he following are the aspects on which the
assessment has to %e done to prepare the Human Resource Audit Report.
0. "ersonal "olicy
1. Human Resource "lanning
3. Recruitment, election and "lacement
6. Human Resource -raining 7evelopment
8. -ransfers and "romotions
9. "erformance Appraisal Reports
:. (mployee Relations
;. *ommunications, uggestion schemes, Areas of participation
<. *ompensation, Rewards, !enefits and ervices
0=. ,elfare Activities undertaking %y the 4anagement.
Advantaes for Human Resource Audit
0. Assessment of the contri%ution of the Human Resource 7epartment to the
2rganization.
1. $mprovement o the "rofessional image of the Human Resource 7epartment
3. (ncourages greater responsi%ility and professionalism among mem%ers of the
Human Resource 7epartment and follow up action to check on its activities.
6. 2rganization of the "ersonnel "olicies, "rogrammes, "ractices systematically
and to derive uniformity.
8. $dentification of the critical personal pro%lems.
9. Reduces the costs of Human Resource 4anagement %y implementation of the
more effective policies and "rogrammes.
:. @ecessity of the Human Resource 7epartmentAs e)istence.
;. $mprovement of the performance of the Human Resource personnel %y
o%servation of the findings on the Human Resource Audit.
<. 4anagements will e)plore possi%ilities to review their HR "olicies %ased on the
recommendations of the Human Resource Audit and feasi%ility to modify the
environmental factors affecting Human Resource 4anagement for effective
realization of the 2rganizational goals and o%+ectives.
0=. -he Human Resource Audit supports the Human Resource staff co5operation and
co5ordination.
OTHER AS!ECTS
-he Human Resource Audit also covers the following aspects and suggests suita%le
recommendations/
0. Rate of a%senteeism of the staff mem%ers
1. Rate of turn over
3. Ratios relating to costs
6. 4an5days Bworking daysC loss due to various reasons
8. Grievances Handling
9. (mployee Relations
:. Grievance, 7isputes, "unishments, afety and Accidents
;. Retirement !enefits of the staff mem%ers
<. Accuracy and regularity of the staff mem%ers
0=. (m%ezzlement of money and Rectification.
!ERIOD O" AUDIT
@aturally any audit will %e done annually. -hough it is preferred to conduct
Human Resource Audit annually, %ut it is advisa%le to conduct audit once in three years
or five years, keeping in view the fact that the realization of the 2rganizational goals
may not %e identified within a year.