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.