The case for corporate compliance programmes

Taslim Ahammad | Published: August 18, 2018 21:08:41 | Updated: August 19, 2018 21:24:42

Corporate compliance is an essential part of operations, no matter what industry the organisation is in. Compliance helps cover internal policies and rules as well as national and international laws. Embedding compliance in corporate policy can help a company prevent and detect violations of rules and from facing fines and lawsuits in the long run.

Compliance ensures that the company is obeying all of the laws and regulations in regards to how they manage the business, their staff, and ensure the rights and welfare of their consumers. Regulatory compliance describes the goal that organisations aspire to achieve in their efforts to ensure that they are aware of and take steps to comply with relevant laws, policies, and regulations.

Compliance is necessary to ensure that litigation hassles do not occur. Additionally, compliance helps to have at hand all necessary evidence that proper steps and actions were taken to prevent any such incident.

Corporate compliance is about managing apparent threat/s. Once these areas are identified, resources can be focussed towards addressing them. This is why regular assessments are necessary as risks are dynamic. A compliance assessment is really a gap assessment. The management tries to identify gaps between the existing control environment and what is required.

Some external government requirements related to compliance include:

  1. i) ANNUAL STATEMENT OR REPORT - Many governments of the world want corporations to submit annual reports so that they can keep updated records about these entities.
  2. ii) FRANCHISE TAX -Some governments want corporations to pay a fee in order to operate within the country.

iii) THE FAIR LABOUR STANDARDS ACT - All corporations are required to comply with the Fair Labour Standards (FLS) that fixes the minimum wage, overtime pay, and record keeping standards for full- and part-time workers.

There are some suggestions for internal compliance. These are:

(i) PHYSICAL ENTRANCE POLICIES -Company should have a documented statement that outlines which individuals or designations have access to varying physical facilities.

(ii) VIRTUAL ACCESS - The company's management should designate who can access the servers, networks, software and other data.

(iii) PASSWORD PROTECTION -The company's password requirements need to be clearly explained. Some essential factors include character specifications, frequency of password changes, blocks after unsuccessful login attempts and instructions outlining how employees should handle their passwords.

(iv) SECURITY UPDATES -The company management may require employees to be equipped with security information. The business should also update employees frequently with any pertinent security notifications, such as potential bugs and attacks.

(v) VIRUS PROTECTION -Employees should be informed that they need to have antivirus programmes on their systems. Also, they should be told how they should respond if a virus is detected.

(vi) EMERGENCY RESPONSE -Employees should be provided with instructions for various types of emergencies, ranging from small server issues to major natural disasters.

The basic standards of compliance can be ensured by evaluating the different factors related to the company. Some of these factors are:

(i) HUMAN RESOURCES - This covers a vast amount of important issues and requires deep dive compliance checks. Failure to comply with even a single human resource policy can land a company in a legal mess. Regular review of human resources policies and procedures need to be done to ensure compliance. Also, the management needs to stay updated about what workplace and communication, equality and benefits, and preventing harassment and discrimination in the workplace.

(ii) REDUCED LEGAL PROBLEMS - Compliance decreases risk of fines, penalties, work stoppages, lawsuits or a shutdown of the business. Hence, hiring a compliance expert is the best thing a corporation can do to ensure that they are following legal and other obligations. A compliance officer is an employee whose responsibilities include ensuring that the company complies with its outside regulatory requirements and internal policies.

(iii) IMPROVED OPERATIONS - Following rules and regulations can help the company. For example, it will prevent any incidents of discrimination and harassment from occurring and also develop a better working environment fostering higher productivity.

(iv) WORKPLACE SAFETY - Regular safety checks, fire drills and inspections by the appropriate governing agencies will ensure safety in the workplace. In addition, employees should be trained to meet operational guidelines.

(v) FINANCIAL SERVICES - Regulations pertaining to financial services need to be at the top of any company's 'compliance' list. Financial service regulators work for the protection of investors/consumers, to ensure fair markets, to reduce systematic risk and financial crime and to maintain consumer confidence in the financial system.

(vi) BETTER PUBLIC RELATIONS - Better compliance can lead to better public relations and promotion of the company.

(vii) DATA SECURITY- Data compliance measures need to be conducted regularly to be certain that they are working properly, safely and quickly. The company needs to be prepared for unannounced compliance audit by obtaining a copy of an inspection checklist from a specific regulatory or governing agency.

(viii)  HIGHER EMPLOYEE RETENTION: The more employees feel that they work in a fair, professional and safe workplace, it is more likely that they will stay with the company.

An audit will assist the directors of the company at discharging their duties and responsibilities to its full extent. It also limits the risk of material misstatement, undetected errors and inaccuracies in a company's annual financial statements while providing an independent assessment of the business's internal financial control systems.

When a corporation fails to meet government obligations, the state may revoke the company's good standing, levy penalties against it, or even dissolve the company.

A compliance monitoring team is also effective for many companies. The compliance team usually sits as an independent function in the second line of defence and provides assurance to the board that the firm is operating within a compliant framework.

Corporations should not wait until an incident has occurred to create or strengthen their corporate compliance policy. Corporate compliance offers the opportunity for managers and business owners to run a successful business. By addressing such issues as wages, hours, safety and health benefits, compliance ensures that employees are treated fairly and that employers are protected.

Taslim Ahammad is Assistant Professor at Bangabandhu Sheikh Mujibur Rahman Science and Technology University, Gopalganj, Bangladesh.

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