You’ve probably heard the old adage that “nothing in life is certain but death and taxes.
Compliance is a continuous process. Corporations must both learn and understand many laws and regulations in order to properly fulfill them – which they do by establishing policies, procedures, and actions to help prevent and detect violations.
Plethora of regulations
There is an ever-increasing number of legal issues like labor payment and filings, SOX, data privacy standards, anti-competition rules, foreign trade regulations, and more, because countries are placing greater and greater emphasis on compliance reporting. Adherence to these regulations is mandatory for corporations to properly conduct business and operate smoothly in each respective territory.
For instance: In India, Section 205 of The Companies Act (2013) requires the Company Secretary to report to the Board on compliance with provisions of all laws applicable to the company. Similar requirements are provided in Clause 49 / Corporate Governance guidelines requiring the Board to certify that structural Legal Compliance Management system is in place.
In the United States, the Sarbanes–Oxley Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act defined significantly tighter personal responsibility of corporate top management for the accuracy of reported financial statements.
The US Department of Labor, Occupational Health and Safety Administration (OSHA) was created to ensure safe working conditions for employees by setting and enforcing certain standards for employers to observe. The Fair Labor Standards Act (FLSA) mandates minimum wage and overtime laws for salaried and hourly, non-exempt and exempt workers. Employees are noticeably more eager to work when they feel they are well compensated for their efforts, and that they are safe within the business’ reach. Proper labor compliance mechanisms can ensure employee satisfaction, and that all complaints or issues are addressed promptly before they escalate and affect the entire corporation.
Reconciling all of the laws, regulations, standards, and guidelines can be a full-time job. In many instances, these obligations are fairly vague and ambiguous. Sometimes, the laws of different jurisdictions are conflicting. This allows plenty of opportunity for missteps due to errors or omissions. If vulnerabilities or compliance violations are discovered, it could require weeks or months to remediate them.
So why should compliance matter to a business?
The concept of compliance is simple: it requires corporations to act responsibly. Nonetheless, it remains one of the most heated topics in the corporate boardroom today. The reason is because most corporations focus on compliance management that could be characterized as a highly reactive.
Reactive compliance is when companies respond to employees, customers, or partners after a breach has already occurred. This is problematic because the damage is already done, and the corporation is subject to lawsuits for gross violations. These compliance risks aren’t just limited to fines and penalties – the effect on public relations, market, and shareholder ramifications can also have devastating effects on the business.
What can be done?
Streamlining compliance in an organization requires a well-tailored system, designed to target specific risk areas without imposing unnecessary restrictions. The question is how to make that happen – how does a business move from scores of regulation and policy spreadsheets to a consolidated, harmonized set of compliance controls?
There are, of course, challenges. It’s important for employers to stay up-to-date with new laws (e.g., paid sick leave) and changes to existing laws (such as minimum wage) as they evolve. With scores of regulatory compliances requiring constant attention and action, organizations can dedicate a significant amount of time ensuring that they are compliant with all these provisions – with no guarantee of full compliance.
But with developments in technology, we have the solution: Automated Compliance Platforms. Automated solutions can track all compliance activity in one place, hassle free. A quality automated compliance platform will assist in assessing, documenting, monitoring and auditing all core functions from both a strategic and operations perspective. The benefits are instant: an automated system removes all opportunity for human reporting errors, grants confidence that current requirements are being met, and prevents the need to reinvent the wheel every time an audit or file is prepared for reports.
It’s clear that automated compliance is no longer a luxury – it’s essential for a successful business. Corner offices must embrace this necessary measure so they might devote more of their focus to productivity and profitability, and stop wasting time and energy in problem-solving the many challenges of compliance.