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GeoInsighter Spring 2006 Newsletter

Compliance Audits

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Asset protection makes good business sense and it is one of the major priorities of every businessman. Operating a business in a manner that prevents injury to employees and damage to the environment is key to achieving this goal, and compliance with Occupational Safety and Health Administration (OSHA) and United States Environmental Protection Agency (USEPA) regulations that are applicable to your facility is a step in the right direction.

Does your company have compliance systems in place and are those systems working?

How do you know if your facility is compliant and up to current standards? The answer is “Compliance Audits.” Audits are a method of ensuring compliance with regulations through effective monitoring and assessment. A good compliance auditor is not only familiar with applicable regulations and permits, but reviews documentation and observes and interviews employees. Recently, OSHA penalized a company for over $21 million, which is almost double the largest previously recorded fine in OSHA history. The violations ran a full spectrum from failure to implement certain aspects of its existing safety program to missing information on a material safety data sheet, to record keeping infractions such as failure to record OSHA recordable injuries on its OSHA log. See News Release dated September 22, 2005 at www.osha.gov. While the company will pay the fine and correct the health and safety violations, the expense incurred is far greater than the cost of a compliance audit. Immediate cash outlay aside, the notoriety attached to the OSHA action could conceivably affect profits for years.

Companies that embrace a strong safety culture realize the benefits of such a culture. According to the Liberty Mutual Research Institute for Safety, for every $1 invested in safety there is a savings of between $3 and $6. Companies realize the savings thru lower workman’s compensation and insurance costs, improved employee morale, productivity, and retention. (Reprint from September 15, 2005 issue of Business Week at www.nsc.org.) Upfront costs of the safety program have a better return on investment than the costs of a catastrophic incident and fines, as well as fixing the safety program after the fact.

The Compliance and Enforcement pages of the USEPA website (www.epa.gov) offer detailed guidance to business managers regarding the USEPA’s compliance incentives and auditing initiatives. These are policies and programs that eliminate, reduce, or waive penalties under certain conditions for businesses, industry, and government facilities that voluntarily discover, promptly disclose, and expeditiously correct environmental problems. The most common way to achieve the above is by compliance auditing.

When do you need to perform a compliance audit?

If your company falls into any of these categories, you may be due. 

  • There is a desire to establish a compliance baseline as a means of prioritizing compliance initiatives.

  • Your company has experienced an employee injury or environmental incident.

  • Your company has experienced a series of near miss incidents, injury or environment related.

  • Your company is considering the purchase of a new facility or the sale of an existing facility (now or in the near future).

  • You’ve recently purchased a new facility or division with multiple facilities and want to compare their compliance programs with your existing corporate programs.

  • You haven’t performed an audit recently and need a compliance baseline to assist with budgeting or forecasting.

  • You are dissatisfied with an agency-performed audit recently and not satisfied with the results.

  • You are experiencing personnel changes or job responsibility reallocations and a compliance baseline would help the current responsible parties.

  • Agency initiatives are focusing on areas that you suspect may be weak in your current compliance programs, i.e., OSHA Local Emphasis Programs.

Simply put, a third party compliance audit can provide you with the information necessary to handle any and all of the aforementioned issues and ensure a consistency unattainable through in‑house audits.  Keep in mind that there is no involvement with day-to-day operations so a third party auditor can efficiently and independently perform the audit without interruption.

Karla K. Yakopcic
kkyakopcic@geoinc.com
 

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