Preparing for a Compliance Audit

August 9, 2021 |

For most cloud service providers (CSPs), a compliance audit is, at best, a necessary evil—the root canal of the business world.

Like a root canal, it can be a painful process that you regret about halfway through, even if you know it’s good for you. But just as you can avoid root canals with proper dental hygiene and regular checkups, the pain of compliance audits can be avoided with proper preparation.

You need to see compliance audits as an integral part of your company culture, rather than as an annual nuisance that everyone wants to complete as quickly as possible. By asking the right questions before an audit and making sure your company’s priorities are in order, compliance audits are not only relatively painless, but also actively beneficial to both your company and clients.

What Does Compliance Mean for a Cloud Service Provider?

Keeping track of multiple internal and external compliance requirements can be taxing for any company, and that’s especially true for cloud service providers.

Unlike companies in other industries, CSPs are rarely able to align themselves with one industry vertical, meaning it’s not always clear which regulations apply to which situations. CSPs can easily find themselves overwhelmed by a multitude of requirements and standards, including those from the PCI Security Standards Council, the Sarbanes-Oxley Act, HIPAA, FISMA, internal audits, privacy protection laws like the GDPR or CCPA, and customer audits. 

To complicate the matter further, companies have a plethora of choices when it comes to key frameworks and reporting certifications that organizations can use to assure regulatory compliance, including COBIT, ISO, NIST, and CIS. These frameworks have adjusted over the years with a heavy focus on risk management. 

This is where the trouble begins. Faced with a host of governing bodies (each with its own set of regulations) and an uncertain path forward, many companies default to a reactive approach. They attack compliance on a departmental basis and wait for issues to come to them. Or on the other extreme, they push paper around trying to prove compliance in every possible area and fail to take into account their own unique risks.

At the extremes, companies end up focusing on the wrong priorities, sending compliance auditors down rabbit holes and making themselves vulnerable. CSPs can’t approach compliance audits with a check-the-box mentality. This will only lead to false positives. Rather, they need to evaluate their unique risks and figure out how compliance can mitigate those risks. Choosing one framework and adhering to it is a great first step. There’s no one “best” compliance framework out there—the best framework is simply the one a company will follow.

In a practical sense, this means that CSPs need to adopt a unified compliance policy that focuses on long-term solutions, not short-term Band-Aids. If they have sound assurance and policy practices already in place, they should be able to tackle most compliance issues across different service lines and industry verticals. And by working to mitigate risk first and foremost, a company can align its priorities and figure out what regulations it needs to comply with. 

Key Questions to Ask Before a Compliance Audit

Once you have the right structure in place, your compliance initiative will become a regular business process. With a better understanding of your own goals, you can arm yourself with the right questions well before the audit begins. This way, you’ll get the most out of the process. Here are five key questions you need to ask yourself as you plan for your audit:

  1. What is the scope of the audit? Because there are so many paths an audit can go down, it’s important to be aware of scope creep. Make sure you understand things such as your key systems and range of IP addresses ahead of time so that you aren’t casting your net too wide. And avoid getting caught up in industry jargon by focusing on how the audit will impact your end users. As a starting point, consider mapping out a data flow diagram for key business processes.
  2. Have the findings in previous audits been corrected? Why or why not? If you’re going through audits and finding the same compliance issues year after year, then the audit isn’t serving its purpose. The sooner you find out what is stopping you from correcting these issues, the easier subsequent audits will be. And if you undergo an audit and find zero issues, then you’re probably spending too many resources on compliance without a balanced focus.
  3. How will you handle the results of the audit? Think about how you’ll assign responsibility for prioritizing and resolving issues that come up during the audit. And make sure you have a plan in place for addressing problems and incorporating them into a continuous improvement process. The results of your audit should reverberate throughout the company for a long time to come.
  4. Is there proper management in place to make sure the audit moves efficiently? Although the results might reverberate long after the audit is over, the audit itself should not last forever. Clearly communicate your business needs, and ensure your audit firm knows how to handle issues as they arise—whether those are issues identified during the audit or challenges with reaching milestones.
  5. How will the audit affect the bottom line? If you’re spending money on an audit, make sure you’re making back that money in other ways. How will the audit help increase revenue or reduce costs? How will it manage your risks? An audit is more than just something to get out of the way; it’s an opportunity to improve the way your business runs. Take a look at some of BARR’s case studies for examples of how audits affected the bottom line at various companies. 

Regulatory compliance—regardless of whether you agree with the regulations—should be seen as a key differentiator, not a drain on resources. With the right approach, an audit can be more than just a way to find out what you’re doing wrong; it can be a process that illuminates the way forward.

This post was originally published on SmartDataCollective.

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