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Your Audit Checklist, Part 3: Anticipating the On-Site Visit

February 10, 2021 By Matt Nusbaum

Just when you thought the compliance audit process couldn’t be any more cumbersome or overwhelming, you learn you’ve been chosen for a Department of Labor (DOL) on-site review. This is no reason to panic, though. A DOL site visit isn’t necessarily a harbinger that your organization is in trouble.

The problem, of course, is that you can’t guess why a compliance officer is coming for an on-site review. Is it for a good reason? Bad? Neutral? If the audit is a “focused review,” for instance, the on-site visit might be necessary regardless of whether you’re being investigated. On the other hand, an audit listed as a “compliance check” means the officer has spotted something unusual that — though extremely rare — could very well expand to a full audit. In general, however, regular audits only include a site visit when the compliance officer finds indicators of potential discrimination.

Of course, you might get “lucky” and be chosen for a random DOL on-site review. These randomized checks typically focus on making sure the Office of Federal Contract Compliance Programs (OFCCP) protocols are airtight. In these situations, the audit hasn’t necessarily been triggered by anything you’ve done.

In unique cases, on-site audits can be completely unrelated to the audit paperwork or findings. I recall one case in which the compliance officer found no indication of potential discrimination, and the contractor had a strong compliance program. Why was the on-site visit scheduled, then? It turns out the officer was curious to see the company’s operations because he was fascinated by the work they were doing.

Strategies for Preparing for a Site Visit

Knowing that audit site visits can occur for myriad reasons, keep the following “how to survive an audit” tips in mind if you’re told to keep a visit date open. You should also include them in your comprehensive audit checklist for future encounters with the OFCCP and DOL.

1. Ask why you’re getting a DOL on-site review.

When you hear that you’ve been scheduled for an on-site review, you have the right to ask why. Never feel uncomfortable asking why the federal government wants to visit your company. After all, it’s an inconvenience. You’ll expend resources and probably run into productivity hiccups trying to get ready.

2. Use the on-site visit to razzle-dazzle the compliance officer.

Here’s the upside of an on-site audit: You’re in the driver’s seat. The compliance officer knows little to nothing about your organization beyond what you’ve offered on paper. Use the site visit to showcase your organization’s complexities and nuances. At the same time, tidy up everything to make sure you come across as a well-run business powered by engaged employees.

3. Coordinate with partners.

Even if it’s the third time you’ve had a site review, you don’t want to go into any on-site visit without help. Coordinate with in-house legal counsel and leaders of your corporate units. Everyone needs to speak from the same script to show the compliance officer a tightly run ship humming along.

4. Treat the compliance officer with deference.

You didn’t invite the compliance officer to your organization, but you should always treat him or her with respect. Offer communal drinks and snacks, but don’t offer any pointed gifts that could seem like bribes. Consider doing other things to welcome them, though, like lowering your strict “no smoking’ policy. Many people still rely on smoking as a way to relieve stress — compliance officers included.

Hosting an on-site audit review can undoubtedly increase your anxiety, but you are equipped to handle it. Take a deep breath and start planning. With the right mindset and the tools you need to prepare, your team will make it through the on-site visit without any problems.

For additional information on this topic, as well as countless other resources, please visit our encyclopedia.

Your Audit Checklist, Part 2: Preparing for DOL Follow-Ups

February 3, 2021 By Matt Nusbaum

You’ve been asked to submit a bevy of audit-related information by the Office of Federal Contract Compliance Programs (OFCCP). You diligently and methodically prepare your submission. After sending it in, you wait. And wait. Suddenly, you may feel like you’re waiting longer than expected.

How long is too long? Should you assume your role in the audit follow-up process is wrapping up if you don’t get a rapid response? Unfortunately, that’s not how an OFCCP audit works.

Audits don’t magically disappear, even if they seem to have faded into the background. Though the OFCCP has taken strides to become more responsive, delays can happen. Even if you don’t receive immediate responses to your initial audit submission, you shouldn’t assume that you won’t be asked for further materials.

Quite the contrary. If it takes a month or longer for a compliance officer to make contact, something is probably happening. For instance, there are many audit requirements that haven’t been made part of the standard scheduling letter that outlines what you should expect to submit. Consequently, your compliance officer may be spending time to figure out what’s missing.

A good example of this is the job group analysis.The OFCCP would prefer to have individual racial and ethnic breakouts, but it hasn’t added those specifications to the regulations. As a result, your compliance officer may compel you to provide the underlying data necessary to flesh out the report — and may ask for other follow-up items.

How can you stay in control of this experience as much as possible? Here are a few steps you can take to ensure you’re making smart, objective decisions during the post-audit phase:

1. Submit everything you’re asked to provide.

Take your audit seriously. Make sure you hold back nothing that you’re required to submit. Sending exactly what’s needed to the compliance officer will lessen your odds of receiving emails asking for missing information or clarifications.

2. Look at the audit from the compliance officer’s perspective.

Contractors should find and use the Standard Compliance Evaluation Report (SCER) located in the Federal Contract Compliance Manual. Compliance officers use the SCER to complete their audits. As you review it, you’ll better understand how an officer will likely view your submission. Remember: Compliance officers are tasked with determining compliance for businesses they know little to nothing about. Any effort to help them complete their work efficiently will always be appreciated.

3. Anticipate that you’ll be asked for more information.

It’s not unusual to receive a flurry of emails requesting additional documents, data, and information related to potential problems. Respond to these communications in a timely fashion, and monitor your email to avoid missing any requests. This should ensure you don’t unintentionally frustrate the compliance officer or miss any deadlines.

4. Touch base after 30 days.

Has it been at least four weeks since you last heard from your compliance officer? Send a quick email. Checking in won’t prompt the DOL to dig deeper into your audit. Instead, it may illuminate the cause of the delay.

For instance, you could discover that the compliance officer is awaiting statistical analysis data or a response from the Office of the Solicitor. Though it can be stressful to realize you’re being scrutinized for potential violations, knowing early is still preferable.

5. Proceed with confidence.

You have ready answers. You’ve met quick deadlines. Let this put your mind at ease. Projecting a strong compliance posture presents an air of calm and self-assuredness. Sometimes, compliance officers test contractors to see whether they drag their feet or scramble. Approaching the audit with confidence buoyed by transparency will set you apart.

An audit doesn’t have to end in a fine or violation finding. If your compliance officer begins to switch from pointed communications to innocuous email requests, they might be signaling that they’re preparing to close your audit file. Even if that’s not the case, it’s never a bad idea to be attentive, proactive, and composed throughout the audit follow-up process.

For additional information on this topic, as well as countless other resources, please visit our encyclopedia at BCGInstitute.org.

Your Audit Checklist, Part 1: The Pre-Submission To-Do List

January 27, 2021 By Matt Nusbaum

Hearing that your company has been chosen for a U.S. Department of Labor compliance audit can put you on high alert. Knowing that you need to submit preliminary review items for that audit can create a pervasive sense of dread.

You typically have about 30 days to button-down your affirmative action program (AAP), resulting in what often feels like a month-long fire drill. During this pre-audit phase, you can expect to sift through supporting materials, analyze employment transactions and compensation data, and prepare to answer a compliance officer’s questions.

In other words, you’re thrust into a sudden rush of activity that could easily stall or at least hamper your company’s typical operations. Instead of letting this pre-submission period derail your workflows, use this time to construct and move through a customized compliance audit checklist.

How can you use this checklist to minimize the risk of compliance violation and the possibility of being sued for alleged discrimination during the hiring process? Below are several pre-audit steps to take and measures to keep in mind.

1. Analyze historical and recent hiring and compensation data.

A compliance officer with the Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) will look at who you hire, how you hire them, and your salary packages. You’ll need to be able to explain how your business monitors compensation practices, putting special emphasis on the pay analysis groups your company uses. (If you don’t designate pay analysis groups, the compliance officer will construct his or her own groupings that could lead to a discrimination allegation.)

When looking at hires, be sure to clean up any erroneous or absent applicant data. This might include deduping candidate pools and filling in missing information. The more straightforward the data, the easier it will be to pull together accurate impact ratio analyses (IRAs) and walk the compliance officer through your hiring process.

2. Watch for possible adverse IRA hiring for AAP job groups.

If your AAP job groups align with placement goals, you’ll want to home in on any adverse IRA indicators. Let’s say you’ve set a placement goal to hire more female engineers. If your IRA indicates an adverse difference in selection rates for women applicants, a compliance officer may presume you’ve engaged in illegal hiring discrimination.

On the other hand, you may discover that your IRA indicates a meaningful difference in selection rates that does not have a corresponding placement goal. Therefore, your hiring process may not be impacting actual utilization. Regardless, you need to be familiar with these factors to speak openly with your compliance officer about them.

3. Keep the lines of communication open.

You will have exchanges with one — if not several — OFCCP compliance officer(s) during the pre-audit phase. View each touchpoint as a chance to make a positive impression. Compliance officers frequently form their “gut instinct” sense of how audits will go during these early interactions.

Keep the lines open, and don’t disappear for days. Unless you absolutely need one, don’t ask for deadline extensions — a sudden request can make it seem like you’re scrambling to cover up potential discrimination violations. When you appear transparent and calm (as per your pre-submission audit checklist), you exude an air of confidence and, in turn, instill more confidence in the officer examining your case.

4. Fix your compliance posture rather than just technical violations.

Your required AAP poster in the break room fell down. You failed to include an Equal Employment Opportunity (EEO) tagline on a job advertisement. These technical compliance violations may cause momentary embarrassment, but they generally aren’t as big of a deal as you might think. You’ll certainly want to remedy technical deficiencies, but don’t get so hung up on them that you forget to concentrate on the “big money” compliance posture issues.

What are compliance posture concerns? Anything where the remedy involves monetary damages paid to alleged victims of discrimination. If you feel confident that you’re doing everything correctly, you’ll be able to present a proud attitude during the pre-audit and audit phases. Legitimate self-assurance can drive a successful audit — particularly when it’s backed by accurate and organized data.

Getting through a compliance audit without issues starts with some old-fashioned preliminary planning. Spend time constructing a pre-submission compliance audit checklist and systematically tackling each item on it. This approach will set your team up for a better, more cooperative experience — and a better audit overall.

For additional information on this topic, as well as countless other resources, please visit our encyclopedia.