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Compliance Management Challenges!

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According to Wikipedia, compliance means observance of a rule. This rule could be a policy, guidelines or law. It also states that regulatory compliance talks about organizations or public agencies’ efforts and steps to comply with relevant laws, policies and regulations.

In organizations, compliance management involves coordinating business process management systems with compliance systems, a tool that connects governments’ legislative and business rules to that of organizations’ processes, policies and procedures.

The aim of the compliance system is to endorse a self-sufficient level of operations by curtailing losses caused to the business through violation of law or internal misappropriations. The system monitors the costing and benefits of each task, whether top most policy or lowliest order transactions of single or multiple processes of the organization’s operations.

At a global level, The International Organization for Standardization (ISO) has worldwide compliance standards such as ISO 177700. The International Electrotechnical Commission (IEC), too, offers compliance standards in the electrotechnology area. There was major failure of compliances vis-a-vis risk-taking capabilities leading to the present situation. Truthful compliance of pertinent laws is the answer to stop repetition of major failure of compliances that the world has witnessed.

Company secretaries are recognized as specialized professionals for corporate governance and compliance management programs. The need of the hour is corporate governance, corporate compliance and corporate social responsibility as much of the turmoil can be avoided.

Failure on the part of the organizations to follow proper compliance management especially affects small stakeholders who painstakingly invest their life’s savings only to be duped by organizations that don’t follow compliance rules.

Corporates too must adopt compliance management just like it adheres to total quality management procedures across all its branches and factories. With the advent of technology in all areas of life, revolutionary changes in the corporate compliance world has to take place due to dematerialization of securities, ECS payment of dividends and electronic filing of documents.

For effective compliance management, the two most important factors are transparency and the disclosure of financial statements. To keep non-compliance repercussions at arm’s length, total corporate compliance management systems should be in place with professionals such as company secretaries managing greater responsibilities towards organizations as well as all the stakeholders in general.

Every entity or corporate organization should promote and maintain honesty, transparency and disclosure starting from the top most level to the bottom level. Comprehensive compliance management is the key to achieve corporate excellence and successful development of business. Non-compliance will result in disqualification of top level managers and heavy penalties in form of fines and imprisonment. Every corporate house or business must put into place total compliance management systems.

Do share your thoughts on the same.

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  • Recent experience calling hundreds of HR managers about an offering of books on State and Federal compliance tells me that compliance is an annoyance. I found that at least 90% of the HR professionals I called would rather 1) outsource compliance, 2) depend on lawyers (after the problem occurs), 3) join a compliance association and feel “covered”, 3) or ignore it and continue by the seat of their pants. Basically there is a deep head in the sand action when it comes to compliance as I have seen it over the past 80 days.

  • One thing I have learned is that a registered agent is a vital part of corporate compliance. If you don’t stay in compliance you run the risk of someone being able to pierce your corporate veil. This means your personal assets would be at risk then.

  • It is true that If you don’t stay in compliance you run the risk of someone being able to pierce your corporate veil, and you put personal assets at risk. What I have seen over and over, is companies getting “caught” (i.e. Andersen, Enron, BP, to name a few), and assets going down the drain quickly.

    This is a hard, but essential question. What is the state of business where registered agents would put their company and personal assets at risk rather than face the elephant in the room? Is it because registered agents hold themselves accountable for compliance that the government has hired 90 new compliance agents (so far) and has created a channel for whistleblowers?

    I received the following answer from a company. When I told them I have a 5-minute audit that would alert an agent to non-compliance, the answer was, “I don’t want to know what I don’t know. I might get fired.” What should we draw from this and other similar comments?

  • Jen

    In an economical time where companies are constantly scrutinized and people are worried about the security of their jobs, I can understand why it’s tough to channel energy and resources into something like compliance management. Sometimes people just don’t have time to think of the long-term repercussions, I guess. It’s sad that it has come to the point where people feel they have to turn a blind eye in fear of losing their jobs or jading the images of their companies!