February 20, 2025
Managing and tracking NERC standards is no easy task for a compliance professional, especially knowing that failure to comply can have serious consequences during an NERC audit.
Without the ability to collaborate with peers—and widely varying audit scopes from one utility and region to the next—utilities can’t know for certain where auditors will shine their flashlights.
Understanding some of the key issues around frequent challenges that arise during an NERC Audit can help companies prepare properly. Leveraging technology and implementing automated compliance software can shift the mindset from anxiety to assurance by demonstrating compliance and reducing and even eliminating audit findings.
Avoiding Common NERC Audit Pitfalls
In any NERC audit, being aware of common errors can help ensure you’re thoroughly prepared so you can avoid unnecessary fines and penalties.
Some of the most frequent issues utilities run into include:
- Process documentation: In the eyes of auditors, if it isn’t documented, it doesn’t happen. Just as important, you need to be able to provide records substantiating that the process has been followed continuously.
- Change management: What systems do you have in place to address and mitigate risks when things change within the organization? Auditors need to see proof that you’re being proactive about risk mitigation when processes evolve.
- Manual errors in evidence collection: If you’re manually collecting evidence, you’re going to want added layers of verification to ensure the data you’re providing is accurate and up-to-date.
Making Audit Readiness a Habit
NERC compliance isn’t just about passing a single audit. It requires proof that you’ve been in continuous compliance over a period of years.
This, combined with the fact that preparing for a NERC audit is a process that takes months, highlights the need for utilities to treat audit readiness as a habit, not an event.
A lot of this comes down to having systems in place for:
- Gathering, cataloging, and storing evidence so you can find it when you need it
- Tracking and mitigating issues to ensure problems are resolved effectively and documented fully
- Risk assessment to identify and mitigate compliance risks before they become findings
- Ensuring accountability around completeness and accuracy of documentation and data, for example, with management reviews and signoffs
Automated systems can play a key role here, both in large organizations with extensive compliance resources as well as smaller entities that need to do it all with fewer staff.
Automating Your NERC Compliance System
Maintaining an audit-ready state is a massive undertaking when you consider the sheer number of requirements and compliance items that apply to utilities today. Compliance with CIP-004, CIP-007, and CIP-010 alone can require documentation of more than 50,000 individual compliance items, for example.
Utilities that adopt an automated NERC compliance management system often see fewer audit findings due to their ability to tie all the pieces together with:
- Evidence management tools to collect and store compliance evidence in a centralized repository, linking it to specific requirements for easy access during audits
- Automated workflows to coordinate compliance activities by assigning tasks, setting due dates, and sending notifications to users to complete tasks
- Real-time standards update to monitor NERC’s website for new or revised standards and automatically update the system with the latest requirements
- Issue tracking and mitigation to document compliance issues, collaborate on investigations, and manage mitigation plans
- Risk assessment and internal controls to document controls, evaluate their effectiveness, and prioritize compliance activities based on risk
Conclusion
Preparing for a NERC audit can’t be a last-minute effort if you expect to avoid findings and demonstrate a proactive approach to compliance. It must be a continuous process built on closed-loop systems for documenting everything down to the last detail—and ensuring full visibility into risk.
The good news: if you can demonstrate that your utility is a model citizen in terms of your compliance system, you’re more likely to see your audit frequency and/or scope reduced.
About the Author
Scott Crow is the Senior Business Systems Strategist – Energy & Utilities at AssurX, where he drives strategic innovation and technological transformation across the critical infrastructure landscape. With extensive experience in delivering IT/OT solutions, Scott specializes in tackling the most pressing cybersecurity and compliance challenges for the energy and utilities sector. His expertise lies in aligning technology with business objectives, seamlessly integrating people, processes, and technology to develop solutions that optimize operational performance while safeguarding critical systems.
