A GDPR audit can expose weaknesses in how you collect, store and use personal data. Those weaknesses could lead to investigations and even substantial fines under some of the world’s strictest data protection laws. 

But fines are just one of the costs of failing a GDPR audit. In this article, we’ll discuss the financial consequences, the reputational costs and other harm that might come from failing a GDPR audit. 

What Is a GDPR Compliance Audit?

A General Data Protection Regulation (GDPR) compliance audit is an independent assessment of an organisation’s compliance with the GDPR. 

It is designed to help companies make sure that they are meeting their obligations under the GDPR, and identify any gaps or areas that need improvement.

Key areas auditors examine:

• Data processing activities: How do you collect and process personal data?
• Data storage & retention: How are you storing personal data, for how long and is it disposed of securely?
• Consent management: How do you obtain, record and manage user consent? 
• Security measures & breach response: What is your incident response policy?

Financial Costs of Failing a GDPR Audit

Failing to comply with GDPR can carry both direct and indirect financial consequences, regardless of business size.

Direct Fines and Penalties

Internal GDPR audits (like the ones Data Protection People conduct) don’t directly lead to fines, as auditors don’t issue fines. 

Third-party reports or complaints may trigger an investigation by a formal regulatory body like the ICO. Regulatory audits by the ICO are more formal, and therefore can lead to fines if evidence of non-compliance is found.

GDPR allows for fines up to 20 million euros or 4% of global revenue, whichever is higher. One of the biggest fines was for Meta in 2023 – a fine of 1.2 billion euros for transferring personal data of European users to the US without adequate protection.

Indirect Financial Impacts

Indirect costs include:

• Legal fees if issues go to court
• Remediation costs to fix non-compliance
• Loss of contracts, clients, or business opportunities

Reputational Costs

While not a direct penalty, a data breach or non-compliance can lead to significant reputational damage. 

• Loss of customer trust. A data breach or compliance failure can erode trust in the brand, leading customers to take their business elsewhere.  
• Negative media coverage. If your brand is big or your case is particularly interesting, you may find that your GDPR non-compliance or breach makes the news. 
• Competitive disadvantage. Your competitors will be more appealing to your customers if they are GDPR compliant, which could mean that you lose business. 

Operational and Internal Costs

There are more costs to consider – ones to the business itself. You might find that there is disruption to business operations during the investigation itself, with staff being redirected to auditing, fixing issues or retraining. 

How to Avoid Failing a GDPR Audit 

Failing a GDPR audit isn’t inevitable. Here’s what we recommend:

• Conduct internal audits regularly
• Implement privacy by design & default
• Train staff and raise awareness
• Maintain proper documentation
• Consider external consultancy or DPO support

Conduct internal audits regularly

Annual audits are recommended to keep up with evolving regulations and to catch gaps early. If you launch a new service, merge with another company or have a data breach you should conduct one immediately.

Implement privacy by design & default

Integrating privacy from the very beginning of your data processing is the best way to ensure that you’re GDPR compliant throughout your systems, services and practices by default. 

Train staff and raise awareness

Human error is one of the common reasons why data breaches occur. Training your staff to be meticulous and to understand policies and procedures is one of the best things you can do to mitigate error, stay GDPR compliant and keep your business safe.

Maintain proper documentation

A core component of the accountability principle, you must maintain records of your data processing activities to stay compliant. The ICO has a helpful guide on how to document your processing activities. At Data Protection People, we have an extensive range of toolkits to use that helps you to remain compliant. 

Consider external consultancy or DPO support

Getting compliant and staying compliant can be complex, especially for staff with no previous experience in GDPR. That’s why you should consider external consultancy or DPO support – the experts know the regulations inside and out. 

Enquire About A GDPR Audit from Data Protection People Today

With a team of certified experts, Data Protection People can audit your data processes and help you identify where you might need to improve. Get in touch with the team about GDPR audits today.