Establishing a framework for effective compliance management

1. Introduction-
   Every business entity has to keep in mind relevant government regulations and their enforcement. Compliance is an essential part of any organization for long term sustainability, growth, and risk management. It is also important for any entity to stay away from adverse scrutiny by authorities. Good compliance levels of an entity foster its brand image in the eyes of government, investors, and customers. Ignoring compliance of the law of the land can jeopardize the existence of an entity in some cases. In the fall of many corporate groups, bad management of compliance was the major issue.Managing compliance is a technical subject. The person handling compliance must have accurate knowledge of the law of the land and the approach of authorities and most importantly, sound legal interpretation skills. Compliance is a dynamic process which involves keeping the organization updated on every regulatory change and impact on the organization. Fulfilling the requirement of compliance necessitates effective management and skilled execution.
2. Steps of compliance management –2.1 Identifying applicable laws –There are multiple laws which are applicable to any organization depending upon the nature of business, methods to carry business, sectors in business. It is most crucial for every organization to make a list of laws directly and indirectly impacting business and not to ignore any regulation impacting the status of the business. Such identification involves understanding the mode of operation of the business.

   2.2 Forming compliance objectives –

   Performance cannot be measured without setting objectives. Clear objectives always give clarity to the organization on what to do and what not to do. Forming objectives involves setting a clear message from top to bottom. The objective may reflect the need of the organization or the minimum standards of the organization. Compliance objectives reflect the attitude of the promoters towards the law of the land and the ethics involved in the business.

   2.3 Setting up standards for compliance –

   Compliance is demands accuracy and leaves no room for errors. Compliance involves disclosures to government departments and to the public. It also includes very crucial information about the organization. Standards of compliance involve the following things:

   • Accuracy of information
   • Adequate disclosures
   • True and fair information
   • Updating with recent changes
   • Authentication by management

   2.4 Preparing a compliance calendar –

   Compliance is a time sensitive job and a delay of even one day may result in penalty or fine. It is also important to know deadlines in advance in order to arrange resources to manage them. The compliance calendar helps the management for effective planning and administering the execution.

   2.5 Fixing responsibility

   As discussed earlier, compliance is a skilled job and can be done only by persons having expertise in it. It is also important to hire a highly competent person to manage the responsibility of compliance or to hire consultants who can help the organization to fulfil such an important duty. Generally, such persons deal with the management directly to understand the requirements and impact of the law on the business.

   2.6 Reviewing the effectiveness of the process

   Every management process is ever continuing and evolving. To ensure the effectiveness of the process, every management needs to revisit and review the process, finding out loopholes in the process and filling the gaps wherever necessary.

3. Tools of effective compliance management 3.1 Written policies and internal procedures Policies are key tools that provide a general strategy to the decision-makers on methodologies to handle issues as and when they arise. Internal procedures are important for the flow of information and for ascertaining the responsibility of the individual attached to it.

   3.2 Training

   To create a culture of compliance, training should be imparted at the time of onboarding and it should be a continuous process. Training keeps officers and employees of the organization updated.

   3.3 Voluntary audits

   It is an effective tool used by many reputed organizations to analyze the standard of compliance systems and to make changes in policies and procedures wherever required. It gives impartial and neutral assessment by a skilled expert.

   3.4 Disciplinary Policies

   No organization should promote or condone noncompliant behaviour. Clear disciplinary policies should be laid down for all officers and employees of the organization irrespective of their status and position.

– Team Efficax