Do you know what compliance is and why it is necessary?
Every company, regardless of its size or area of operation, is subject to a series of legal obligations from a legal and accounting point of view.
Therefore, in addition to taking a strategic look at productivity and profitability, company managers need to be aware of compliance with external and internal standards.
They must guarantee an ethical posture of employees of all hierarchical levels.
For this, there are compliance actions. The expression comes from the English verb to comply, which, in free translation, means “to act according to rules, commands or instructions”.
In the corporate universe, a company that is in compliance is one that acts in compliance with the legislation.
In today's text, we'll talk a little more about what compliance is, what its benefits are and how to implement these actions in your company. Keep following!
What is compliance?
In other words, the term compliance is used to refer to organizations that meet all the requirements of the bodies that regulate their operations.
For this, they must take into account their area of operation in the market, the type of activity performed by the company, etc.
The term is also related to compliance with the company's internal regulations such as its accounting control policies, business ethics and rules of conduct.
This type of activity is extremely important for companies of all segments and sizes.
However, it is especially relevant for large companies, since its administration is much more complex.
Therefore, it is necessary to ensure that good business practices so that the company is in compliance with internal and external standards.
As it is an activity directly related to the laws, when this type of activity arose, it was performed especially by the legal sectors of companies or carried out through legal advice.
This is because the professionals in the area have the necessary know-how to interpret the laws and find out if the company's performance is in compliance with them.
However, in the last few years, the importance of compliance in companies has increased its scope.
In addition to policies and standards, business processes also became part of this activity. Therefore, compliance has become part of what we call strategic business management.
Currently, this is an essential practice for any company that seeks to act in an ethical manner, preserving its integrity.
It also includes actions aimed at preventing and combating corruption, irregular behavior or illegalities within the company.
It is worth mentioning that compliance actions are also disciplinary in character. They educate employees and managers regarding these rules, their penalties and their negative impacts on the company in case of non-compliance.
Importance of compliance in companies
As seen, the main point of compliance actions is to make the company comply with the law, avoiding fines.
In addition, knowing external standards helps to build internal standards, procedures and policies more coherently.
This also helps to protect the company's reputation. Being in compliance demonstrates legal and social responsibility, which affects the image of the business.
Ethical performance has a direct impact not only on the way the company is seen in the market, but also by its employees and customers.
The constant mapping and diagnostics that are part of the compliance strategy ensure more security in the company's performance.
In this way, it prevents unforeseen situations involving legal procedures. This also ensures more efficient management and greater control of internal processes, increasing efficiency and transparency.
Being in compliance also guarantees other benefits for the company, such as the valuation in the financial market and the attraction of more investments (since it proves to be a safe enterprise).
Companies that comply with the laws also have the advantage of obtaining discounts on credit lines, which is essential for those who want to expand the business.
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What does a compliance agent do?
The compliance agent acts strategically in the management of the company, together with the legal and accounting sectors.
In general, this professional is graduated in areas such as Accounting or Law – and, according to research, the career is among the most promising in the legal area.
Among the actions taken by the compliance agent are:
- the elaboration of internal rules;
- the elaboration of audits;
- delegating and directing activities to the managers of each area;
- search for solutions in case of non-compliance with the law.
He also acts in a preventive way in relation to possible frauds within the company's management. In addition, it also guarantees the security of confidential business information.
To this end, the professional must master the tools and resources necessary to ensure the mapping, diagnosis and reporting of the situation.
Its performance must take into account external legislation, internal rules and policies, as well as the objectives and results desired by the business.
It is worth remembering that the role of the compliance agent is not like that of an external auditor, who acts on a compulsory basis.
The compliance action initiative must come from the company itself, which understands and values the importance of complying with regulations, and not just as an obligation.
How to implement compliance: step by step
To implement compliance actions in the company, the ideal is to have a department focused on this.
In addition to the compliance agent, it is interesting that the team has qualified professionals in the areas of Law, Accounting, Finance and Administration.
Below, we list what are the necessary steps on how to implement compliance to start planning and implement this strategy in the company. Follow:
1. Process mapping
The first step to start planning compliance actions is to map the company's internal processes.
This is essential for the strategy to be in accordance with the business reality, in line with your specific needs.
The ideal is to make the whole panorama of the financial and accounting situation of the company, in addition to considering the legal aspects.
2. Analysis of business objectives
Then, it is necessary to analyze what results the company intends to achieve in the short, medium and long terms. This is because, as mentioned, compliance actions go beyond simple verification and compliance with the rules.
Currently, they are an integral part of strategic business management and must be aligned with the company's objectives.
3. Risk measurement
The measurement of risks refers to the impacts that the company can cause, whether social or environmental, by disregarding rules and regulations.
This also applies to the risks of accidents at work carried out by the company itself and its employees, in case of disrespect for labor laws, for example.
Therefore, it is necessary to make a careful assessment of these points to implement compliance actions.
4. Adequacy to external standards
Compliance actions include points that concern safety standards, labor rights, environmental, tax, regulatory laws, etc., both in UK residents and international legislation (in the case of multinationals or companies that work with import and export).
Given this and having in hand the data obtained in the mapping stage, it is necessary to make a survey of the external standards that the company must follow.
They may vary according to the type of service or product offered, the location, the environmental and social impact, the area of operation, among other possibilities.
5. Elaboration of the internal regulations
Based on external standards, it is necessary to prepare the specific internal regulations of the company. This document will be responsible for drafting the rules of conduct for all employees, with due regard for ethical and responsible posture.
In addition to the legislation, this document must take into account the values of the business, its internal policy and other specifics of the company's reality, if applicable.
6. Disclosure to the team
Compliance should not be a strategy restricted to the team responsible for it. It is necessary to disclose the actions so that employees are aware of the company's position in relation to their obligations.
The internal regulations must be accessible and explained to all employees. They should understand how to apply it in their daily work.
Read too: How to improve internal communication in the company: 6 efficient secrets.
7. Monitoring of results
As with any other strategic action within business management, one of the most important steps in implementing compliance is the monitoring of results.
This follow-up allows the correction of possible errors, in addition to ensuring compliance with the internal regulations.
Finally, after analyzing the results obtained through the implemented actions, the last step is to make any adjustments that are necessary to optimize the compliance strategy. As with any project in the implementation phase, there will always be the possibility of instituting improvements.
As you can see, being in compliance is essential for companies that want to act ethically and with fiscal, social, labor and environmental responsibility.
In addition to avoiding possible penalties, these actions directly reflect the company's image in the market, guaranteeing a good reputation.
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