Dear,
In simple term, aduit means inspection/verification/checking. Any kinds of audit should be done against some standard policy or procedures. Now as HR includes numbers of segments like R&S, T&D, Payroll &Compliance and others, lets make you understood audit of one segment.
Lets say Company asked you to do Audit of Payroll&Compliance. So first of all find out the factors/fields that are associated with this to execute this like attendance, overtime, Leave, salary structure, arrears,esi, PF etc etc. Then collect policies laid down by company as well as policies of central &state government acts related to these, whichever is applicable. After that you need to verify if the payroll processing and compliance is being fulfilled as per policy or not . You need to prepare a report of the feedback in a excel sheet for the same.
The main intention of the audit is to check if everything is going well or some mistakes or biasing is being done.