How to Assess Compliance: 6 Steps to Take Today

Compliance is not just a legal obligation; it’s the foundation of trust and integrity in any organization. A thorough compliance assessment keeps this foundation strong by identifying potential risks and reinforcing the commitment to ethical practices.

Key Takeways

What is Compliance Assessment and Why is it Important?

Compliance assessment means systematically evaluating an organization’s adherence to regulatory requirements, internal policies, and industry standards. This process ensures that all operations are conducted within the legal and ethical frameworks, helping organizations maintain their integrity and avoid potential pitfalls.

Importance of Compliance Assessment

Assessing compliance is crucial for maintaining organizational integrity. It helps in the following ways.

• Prevent Legal Issues: Regular assessments help avoid legal penalties and sanctions.
• Enhance Trust: Ensures stakeholders’ confidence in the organization’s integrity.
• Identify Risks: Helps in recognizing and mitigating potential compliance risks.
• Improve Efficiency: Streamlines operations by ensuring all procedures comply with relevant standards.

Now that we understand what compliance assessment is and why it’s important, let’s dive into the steps.

6 Steps of Compliance Assessment

To achieve and maintain regulatory compliance, it’s crucial to follow a systematic and thorough approach. As revealed in the 2023 Thomson Reuters Risk & Compliance Survey Report, risk and compliance professionals spend most of their time identifying and assessing risk (56%) and monitoring compliance (52%). This emphasizes the need for a systematic method to manage these critical tasks efficiently.

The following six steps provide a comprehensive framework for conducting an effective compliance assessment. Let’s dive into these six essential steps that will guide your compliance assessment process.

Step 1: Plan the Assessment

Planning the assessment is the foundational step in ensuring a thorough and effective compliance evaluation. This preparation sets the stage for a systematic and comprehensive compliance assessment and drives the organization toward its compliance goals.

1. Define the Scope of the Assessment

Defining the scope of the assessment sets the boundaries and focus areas for the compliance evaluation.

• Identify Key Areas: Determine which departments, processes, and regulations will be included.
• Set Objectives: Clearly outline the goals and expected outcomes of the assessment.
• Determine Timeline: Establish a timeline for the assessment activities.
• Consider Resources: Assess the resources required, including personnel, tools, and budget.

2. Determine the Assessment Team

Selecting the right team is essential for conducting a comprehensive and unbiased compliance assessment.

• Select Experienced Individuals: Choose team members with relevant expertise and experience in compliance and auditing.
• Diverse Skill Sets: Ensure the team has a mix of skills, including legal, financial, and operational knowledge.
• Assign Roles: Clearly define each team member’s role and responsibilities within the assessment process.
• Include Internal and External Members: Consider including both internal staff and external experts to provide balanced insights.

3. Prepare for the Assessment with Leadership’s Support

Gaining leadership support is not just beneficial; it ensures the success of the compliance assessment. Their backing ensures necessary resources and authority, making their involvement in the process crucial.

• Secure Commitment: Obtain a clear commitment from leadership to support the assessment process.
• Communicate Objectives: Clearly explain the goals and importance of the assessment to leadership.
• Allocate Resources: Ensure leadership allocates sufficient resources, including time, budget, and personnel.
• Establish Authority: Ensure the assessment team has the authority to access necessary information and make necessary inquiries.

4. Set Clear, Measurable Criteria for Assessment

Setting clear, measurable criteria ensures that the compliance assessment is objective and results are actionable.

• Define Success Metrics: Identify specific metrics to measure compliance, such as adherence to policies and procedures.
• Create Checklists: Develop detailed checklists to guide the assessment process.
• Benchmark Standards: Use industry standards and regulatory requirements as benchmarks for evaluation.
• Set Performance Targets: Establish performance targets to gauge the effectiveness of compliance measures.

Example: A hospital system plans its compliance assessment by focusing on patient data privacy and HIPAA regulations. The assessment team includes IT, legal, and medical staff, with leadership emphasizing the importance of compliance to maintain patient trust.

Once the planning is done, the next step is to roll up our sleeves and conduct a thorough compliance review.

Step 2: Conduct A Compliance Review

Conducting a compliance review is essential for gaining a comprehensive understanding of your organization’s adherence to regulatory requirements and internal policies. This step ensures that all critical areas are thoroughly examined to identify both strengths and areas needing improvement.

Identify Strengths and Vulnerabilities

Identifying strengths and vulnerabilities helps to pinpoint areas where the organization excels and areas that require improvement.

• Analyze Compliance Data: Review compliance records and reports to identify patterns and trends.
• Conduct Internal Audits: Perform internal audits to evaluate the effectiveness of current compliance measures.
• Benchmark Against Industry Standards: Compare your compliance performance with industry benchmarks to identify gaps.

Review Standards, Policies, and Procedures

Reviewing standards, policies, and procedures is essential to ensure they are current and effectively support compliance efforts.

• Conduct Comprehensive Reviews: Regularly review all compliance-related documents to ensure they meet current regulations.
• Evaluate Relevance: Ensure that standards and policies are still relevant to the organization’s operations and industry practices.
• Check for Consistency: Verify that procedures are consistently applied across all departments and functions.

Assess Oversight and Risk Management

Assessing oversight and risk management is crucial to identifying errors and effectively managing potential risks.

• Identify Oversights: Review processes to detect any errors that could lead to compliance issues.
• Analyze Risk Assessments: Examine existing risk assessments to determine how well risks are being identified and managed.
• Review Control Mechanisms: Ensure that internal controls are in place and functioning effectively to mitigate risks.
• Monitor Compliance Programs: Check the effectiveness of compliance programs in addressing identified risks and preventing oversights.

Gather Employee Training Feedback

Gathering employee training feedback is essential to ensure that compliance training is effective and meets the needs of the organization.

• Conduct Surveys: Use surveys to collect feedback from employees about the training programs.
• Hold Focus Groups: Organize focus groups to gain in-depth insights into the effectiveness of the training.
• One-on-One Interviews: Conduct individual interviews to gather detailed personal feedback.
• Use Feedback Forms: Distribute feedback forms at the end of training sessions to capture immediate reactions and suggestions.

Example: A university conducts a compliance review to ensure adherence to federal financial aid regulations. The review identifies strengths in their application process but vulnerabilities in record-keeping practices.

After gathering all this invaluable feedback, it’s time to analyze the findings and perform a gap assessment.

Step 3: Analyze Findings and Perform a Gap Assessment

Analyzing findings and performing a gap assessment is critical to understanding the current state of compliance and identifying areas for improvement. This step helps to pinpoint weaknesses and develop strategies to bridge compliance gaps effectively. It includes the following steps.

1. Document the Review Findings

Documenting the review findings is essential for creating a clear record of the compliance review process and its results.

• Compile Data: Gather all relevant data from the compliance review, including notes, observations, and collected evidence.
• Organize Information: Arrange the findings in a structured format, categorizing them by key areas such as strengths, weaknesses, and compliance gaps.
• Create a Report: Develop a comprehensive report that outlines the findings, using clear language and supporting data.
• Use Visual Aids: Enhance understanding by using charts, graphs, and tables to present the findings visually.

2. Identify Root Causes of Non-Compliance

Identifying the root causes of non-compliance is crucial to address the underlying issues and prevent future occurrences.

• Analyze Data: Examine the documented findings to identify patterns and recurring issues.
• Conduct Interviews: Speak with employees and stakeholders to gain insights into potential causes of non-compliance.
• Review Processes: Evaluate existing processes and procedures to pinpoint weaknesses or shortcomings.
• Consider External Factors: Assess external factors such as regulatory changes or market conditions that may contribute to non-compliance.

3. Conduct a Gap Assessment

Conducting a gap assessment helps to identify the differences between current compliance practices and desired standards.

• Review Documentation: Examine all documented policies, procedures, and compliance records to understand the current state.
• Conduct Benchmarking: Compare your organization’s compliance practices with industry peers to identify potential gaps.
• Perform Site Visits: Conduct site visits and inspections to observe actual practices and identify discrepancies.

Example: A food manufacturing company analyzes findings from its compliance review and identifies root causes of non-compliance related to health and safety standards. A gap assessment shows a need for improved sanitation procedures and staff training.

Having identified the gaps, the next critical step is to communicate these findings effectively to your stakeholders.

Step 4: Review and Report to Key Stakeholders

Reviewing and reporting findings to key stakeholders is a crucial step in the compliance assessment process. This ensures transparency, accountability, and the alignment of compliance efforts with organizational goals. Here’s how you can do that.

Report Findings and Gaps to Leadership

Communicating findings and gaps to leadership ensures informed decision-making and effective compliance management.

• Schedule a Presentation: Arrange a formal presentation with leadership to discuss the findings.
• Use Clear Language: Communicate the information in clear, non-technical language.
• Engage in Dialogue: Encourage questions and discussions to ensure leadership fully understands the implications.

Highlight Risks

Emphasizing identified risks is crucial for addressing compliance issues and improving overall compliance posture.

• Prioritize Risks: Rank identified risks based on their potential impact and likelihood.
• Highlight Key Risks: Clearly outline the most significant risks identified during the assessment.
• Provide a Summary Document: Offer a concise summary of the risks and their potential impact for leaders to review and reference.

Example: A healthcare provider reports findings on HIPAA compliance to its board, emphasizing data breach risks and the need for enhanced cybersecurity measures. The report includes a detailed action plan for improving data protection.

With risks highlighted, the next crucial step is to develop an effective plan for improving your compliance posture.

Step 5: Develop a Plan to Improve Compliance Posture

Developing a plan to improve compliance posture is essential for addressing identified gaps and ensuring long-term adherence to regulatory standards. This step focuses on creating actionable strategies and assigning responsibilities to foster a culture of continuous compliance improvement.

Develop an Action Plan with Responsibilities

Creating a detailed action plan with clearly assigned responsibilities addresses compliance gaps effectively.

• Outline Specific Actions: Define clear and specific actions required to address each identified compliance gap.
• Assign Responsibilities: Allocate each action item to specific team members or departments.
• Set Deadlines: Establish realistic deadlines for each action to ensure timely completion.
• Provide Resources: Ensure that the necessary resources, such as training or tools, are available to those responsible for implementing the actions.
• Create Accountability: Establish a system for tracking progress and holding individuals accountable for their assigned tasks.

Monitor Progress Toward Compliance Improvement

Monitoring progress is essential to ensure that the action plan is effectively implemented and compliance improvements are achieved.

• Set Milestones: Establish clear milestones to track progress at different stages of the action plan.
• Regular Check-Ins: Schedule regular meetings to review progress and address any challenges.
• Adjust Plans as Needed: Be prepared to adjust the action plan based on feedback and changing circumstances.
• Report Progress: Regularly update leadership and stakeholders on the progress towards compliance improvement.

Example: A financial institution develops an action plan to improve compliance with anti-money laundering (AML) regulations. The plan includes specific tasks, assigned responsibilities, deadlines, and resources needed for implementation.

Finally, to ensure that these plans are executed smoothly, consider leveraging compliance management tools.

Step 6: Adopt Compliance Management Tools

Adopting compliance management tools is essential for enhancing the efficiency and effectiveness of compliance processes. Leveraging technology can streamline assessments, automate tasks, and ensure the organization stays updated with regulatory changes.

Utilize Technology for Assessment Management

Leveraging technology for assessment management can significantly enhance the efficiency and accuracy of compliance evaluations.

• Implement Compliance Software: Use dedicated compliance management software like VComply to streamline the assessment process.
• Centralize Data: Ensure all compliance data is stored in a central, easily accessible location.
• Real-Time Monitoring: Employ tools that allow for real-time tracking and monitoring of compliance activities.

Automate Compliance Tasks

Automating compliance tasks can save time, reduce errors, and ensure consistent adherence to regulatory requirements.

• Identify Repetitive Tasks: Determine which compliance tasks are repetitive and suitable for automation.
• Implement Automation Tools: Use software solutions like VComply to automate tasks such as data entry, monitoring, and reporting.
• Schedule Regular Audits: Set up automated schedules for regular compliance audits and reviews.
• Use Workflow Automation: Create automated workflows to ensure that compliance tasks are completed in a timely and efficient manner.
• Monitor Automated Processes: Regularly check automated processes to ensure they are functioning correctly and make necessary adjustments.

Stay Updated with Regulatory Changes

Staying updated with regulatory changes is crucial to ensure ongoing compliance and avoid potential legal issues.

• Subscribe to Regulatory Updates: Sign up for newsletters and alerts from regulatory bodies to receive timely updates.
• Use Compliance Software: Employ software like VComply that automatically tracks and updates regulatory changes.
• Attend Industry Seminars: Participate in industry conferences and seminars to stay informed about the latest developments.
• Engage with Professional Networks: Join professional networks and forums to discuss and learn about new regulations.
• Regularly Review Policies: Periodically review and update your organization’s policies and procedures to reflect the latest regulatory changes.

Example: A non-profit organization adopts compliance management tools to automate donor data collection and ensure compliance with privacy laws. The tools help streamline processes, reduce manual errors, and keep the organization updated on regulatory changes.

Assess Compliance with VComply

Utilizing VComply can significantly enhance your organization’s compliance management. It offers a comprehensive suite of tools designed to streamline the entire compliance process.

Implement Compliance Programs

VComply helps organizations establish robust compliance programs by integrating policies and procedures into a centralized system. This ensures that all regulatory requirements are consistently met across the organization. 

Collaborate on Compliance Tasks

VComply facilitates seamless collaboration among compliance teams by providing tools that enable real-time communication and task management. Teams can easily assign tasks, track progress, and ensure that all compliance activities are completed efficiently. 

Automate Workflow

Automation is a key feature of VComply, helping organizations save time and reduce errors in their compliance processes. The platform automates repetitive tasks such as data entry, monitoring, and reporting, ensuring that compliance activities are carried out consistently and accurately. 

Generate Compliance Reports

VComply’s advanced reporting capabilities allow organizations to generate detailed compliance reports with ease. These reports provide valuable insights into compliance performance, highlighting areas of strength and identifying potential risks. 

By integrating VComply into your compliance strategy, your organization can enhance its ability to manage compliance efficiently, ensure adherence to regulatory standards, and foster a culture of continuous improvement.

Try VComply by requesting a demo today!

Frequently Asked Questions (FAQ) on Assessing Compliance

Q1. What does compliance assessment mean?
Compliance assessment is the process of evaluating whether an organization is meeting its legal, regulatory, and internal policy obligations. It involves reviewing documentation, interviewing stakeholders, monitoring processes, and identifying gaps that could expose the business to risks or penalties.

Q2. How often should compliance be assessed?
The frequency depends on the industry and regulatory environment. Highly regulated sectors such as healthcare, finance, or energy may require quarterly or annual compliance assessments, while others may perform them semi-annually or before major audits.

Q3. Who is responsible for assessing compliance within an organization?
Typically, the compliance officer or compliance team leads the process. However, department heads, internal auditors, and external consultants may also play key roles in conducting and validating assessments.

Q4. What are the key steps in conducting a compliance assessment?
A structured compliance assessment usually includes:

1. Defining applicable regulations, standards, and internal policies

2. Gathering evidence and documentation

3. Evaluating processes and controls

4. Identifying non-compliance gaps

5. Recommending corrective actions

6. Reporting findings to leadership

Q5. What tools can be used to assess compliance effectively?
Organizations often use compliance management software, audit checklists, risk registers, and monitoring dashboards. Automated tools reduce manual errors and help track obligations, evidence, and deadlines in real time.

Q6. What happens if non-compliance is identified during an assessment?
Non-compliance should be documented and prioritized based on risk level. Corrective actions must then be assigned, tracked, and completed within a defined timeline. In some industries, significant issues may also need to be reported to regulators.

Q7. How does compliance assessment benefit organizations?
Regular assessments reduce the risk of fines, lawsuits, and reputational damage. They also build stakeholder trust, improve operational efficiency, and prepare the business for external audits and certifications.