Audits Help Firms Stay On The Right Side Of The Law

Business owners will be well aware that regular audits can help provide a detailed look at the company’s finance. However, as well as providing a critical analysis of a business’s financial records and documentation, a focussed audit can also keep a firm on the right side of employment law, in such areas as the Equality Act 2010.

For example, it is illegal not to operate an equal pay policy. Equal pay means ensuring that what employees are paid is not affected, even unintentionally, by factors such as their sex, their race, or whether they have a disability.

The provisions of the Equality Act on equal pay specifically cover the pay of men and women, and traditionally, most equal pay audits have focused on gender.

However, paying employees differently because of their ethnicity or disability is also unlawful under the race and disability provisions of the Act. The law says that an employer must provide equal pay when employees are doing equal work.

If a firm can prove that it carries out regular pay audits, it is less likely that a disgruntled employee can take it to a tribunal on the grounds of unequal pay because of any of the factors mentioned.

While another Act that may impact on a firm’s finances is the Bribery Act 2010, which creates the offences of offering or receiving a bribe, bribing foreign public officials and failing to prevent a bribe from being paid on an organisation’s behalf.

Having said that, the last of these is defensible where the organisation concerned can show that it has adequate procedures in place, which is an area where the review work of an internal auditing team will probably add most value.

As an accountant, Nigel Fry, specialises within the audit and accounting sector.

Posted in News.