Increasing Compliance Transparency for Internal and External Audits

The view many of us have about transparency doesn’t reflect the true nature and importance of transparency. Usually when someone is talking about transparency they are really talking about the person or organization being forthcoming. There is a subtle but very important difference between the two. When an organization or person is forthcoming, it means that they will provide you information when needed or when you ask.

What makes something truly transparent?

Transparency, as the name suggests, defines how easy it is to see inside something. When a clock has a transparent body, you can see each gear turning. You don’t just see the second hand going tick, you see what makes it tick. You understand the mechanism behind the clock. If something is wrong, you can quickly see which part has stopped working, because of the transparency.

When we talk about compliance being transparent, that is the view we are aiming for. When the CEO, the board of directors, or any senior manager needs any compliance or audit information, they can simply ask for it. That isn’t transparency. Transparency is achieved when the entire leadership team can see how compliance is performing, what makes it tick, and what parts have stopped working and are causing problems.

Why audits need transparency

Audits, both internal and external, are necessary to keep an organization running smoothly. Increasing complexities in the regulatory environment are driving organizations to seek a holistic and highly integrated approach to manage the entire life cycle of their audit management processes. Audits allow us to explore issues and problems that may have been overlooked. We comb over the details to ensure that nothing was missed, nothing that may end up causing a huge loss in the future. Audits take a lot of time and effort, but their necessity means that no matter how much time or effort they take, organizations will keep doing audits. The only way we can improve this situation is if it was easier and faster to audit an organization, for both internal and external auditors.

That is exactly that compliance transparency accomplishes. It allows audits to be carried out faster because all the information that audits need is easily accessible. However, there is one very important ingredient in compliance transparency that we haven’t gotten to yet: technology.

How technology drives transparency

GRC technology is a crucial component of transparency, because without GRC technology it is almost impossible to have a truly transparent system. For instance, document control. You cannot see what files have been edited, or what documents have been changed unless there was technology tracking all these changes. You will not be able to see every compliance action that was taken, because, once again, nothing was being tracked by a GRC system. Without a GRC system things get complicated.

If there was an error in a document, and auditors wanted to investigate who made the error, they will have to trace every person who had access to the document and then ask them about what changes they made, even then they will receive vague information. On the other hand, if a GRC system is in place, a few clicks will instantly tell you who edited what with the exact date and time, down to the second.
That is why compliance transparency requires technology. It tracks every action taken by the compliance department and other users involved in activities which are compliance sensitive. The only way to accomplish this without GRC technology would be to record a video of each employee every second of the day, and even if you were okay with how much that would cost, the resulting atmosphere will be dystopian enough to make your organization the worst place to work at.

Remember, audits are not slow, and audits are not fast. The speed at which an audit performs depends on the transparency of the component being audited. If all the information that the auditors need, be they internal or external, is easily available in a transparent system they will be able to do their job faster and better.

The internal audit needs of companies range from simple to diverse and complicated. For this reason, Predict360 built an Audit Management Software that is highly configurable and enables organizations to manage the complete audit lifecycle: audit planning, audit plans, checklists, field data collection, development of audit reports and corrective and preventive action recommendations.

Predict360’s risk-based Audit Management Software is based on the Institute of Internal Auditors (IIA) standards. The module is licensable as a standalone web-based application or as part of a highly integrated regulatory change management, risk management, incident, policy, procedures, competency and learning management solution.

About the company

360factors, Inc. (Austin, TX) helps companies improve business performance by reducing risk and ensuring compliance. Predict360, its flagship software product, vertically integrates regulations and requirements, policies and procedures management, risks and controls, audit management and inspections, and on-line training and qualifications, in a single cloud-based platform based on artificial intelligence.

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