ARTICLE: Compliance Management System

Compliance refers to the laws, code of conducts and the standards of the good governance. A system of compliance management is the system, the intention of which is to understand the responsibilities and to ensure that all the employees in the organization are well aware of their duties and responsibilities. It also includes ensuring that the requirements of the business are appropriately merged in to the processes of the business.

Following image represents the framework of compliance management system:

Usually, there are many internal and external elements that effects an organization and that make it difficult to understand that whether an organization will be able to achieve the goals or not. In many primary areas like Market and Product Development, Risk Management, etc. the compliance management system helps in addressing the risks.

There are three vital elements of the compliance management system which are: Board and Management oversight, Compliance audit and Compliance program. All these elements are inter-reliant. An organization can easily and effectively manage its compliance responisibilities if all the three elements tend to work collectively.

Training, personnel and processes are the fundamental constituents of a compliance program.

We will come back to it later.

Lets first understand the basis requirements of a compliance management system:

  • Risk and compliance goes hand in hand.
  • To assist the users who are living in multiple locations to record, examine and assess the compliance information, there is a need of central system.
  • Real- time data is required by the compliance officers.
  • To regulate the risk and assess compliance, unique and different integrated solution will be used by the risk officers.

In addition to this, there are some other IT requirements of the compliance management system. These are:

  • A central system to help the users to record and evaluate the information.
  • ERP applications which exists in the organization.

Coming back to the fundamental constituents of the compliance management system; following is a brief description of these elements.

1. Training

Training of the workers, employees and the top management is imperative to maintain the efficacy of the compliance management system. It is very important to offer training to the employees in relation to their job structure and the rules and code of conducts related to the line management. A compliance officer is responsible for organizing and conducting regular training sessions for the staff members, management and the directors. By organizing in- house training sessions, employees will be able to participate collectively. After providing thorough training to the personnel on a specific topic, the responsibilty of the complinace officer is to have a check on the employees regularly so that he can come to know that whether the employyes are able to get the crux of the training sessions or not. It also helps the compliance officer to assess the knowledge of the employees about that particualar topic.

2. Personnel

Board of directors, management and the staff forms part of personnel for the development of compliance management system.

The primary responsibilty of the Board of Directors is to maintain the efficacy of the compliance management system. They are answerable for the following:

  • Approving the policies
  • Observing the assessment of risk and then discovering more ways to cope up with them
  • Monitoring the control system
  • Approving the control system
  • Establishing the policies by considering the needs of the organization.

The responsibility of the management is to effectively manage the compliance with the rules and code of conducts. Their primary responsibilties are:

  • To make sure that the risks are managed effectively.
  • Acquiring the roles of leadership.
  • Identifying different risks which are there in different divisions of the enterprise.
  • Making sure that all the employees are well trained.
  • In order to report the breaches, reporting and discovering effective steps.

The employees are responsible for complying with the rules and regulations. On the other hand, it is imperative for the employees to take active part in training sessions and then report and intensify all their concerns.

3. Processes

As the environment of the business keeps on changing, documentation of the policies and processes is to be done and updated repeatedly. The policies of the compliance management system helps in defining the goals and missions.

There are total six processes which are included in the development of a compliance management system:

  • Understanding the regulatory and legal environment
  • Dealing with the obligations
  • Establishing and maintaining the essentials of a compliance management system
  • Evaluating the factors associated with risks for developing the compliance management system.
  • Observing and assessing
  • Connecting and reporting

Administration

Cost in relation to the human resources which is required to be incurred for developing and maintaining the compliance management system forms part of the budget of the system.