Establishing an Interconnected and Comprehensive Compliance Program
Fraud and misconduct in organizations is a persistent, worldwide challenge for board members and executives. It can expose corporations to regulatory, legal, or reputational damages as well as have a direct effect on profits and productivity. This necessitates the need for the creation of an interconnected and extensive compliance program. This essay seeks to outline the responsibilities of the compliance, legal, and internal audit officers in the management and oversight of a comprehensive compliance program, provide their roles and functions, and why each is essential for an effective control system.
Chief Compliance Officer
The occupant of the position is responsible for overseeing and managing compliance issues in an organization. The officer ensures that the entity adheres to the different regulatory requirements and that staff members are compliant with internal policies and procedures (Custom Text, 2019). The responsibility of the office is to design systems and policies needed by an organization and communicate them to the employees. Additionally, the office evaluates compliance, investigate violations or incidents of non-compliance, and report to the senior management of matters associated with compliance (ranging from policy creation to enforcement and implementation). Importantly, the officers should be proactive in recognizing potential vulnerabilities as well as be in a position to counter them with corrective measures. The officers should also carry on with coming up with guidance on how a company and its employees can avoid similar occurrences in the future.
The function of a compliance officer is essential to an establishment in various ways. First, the officer needs to ensure that an organization conducts its affairs in full adherence with the global and national regulations and laws that relate to its particular sector, and professional standards, internal standards, and business practices (Sampson, 2016). The other importance of the officer is that they empower the broader organization to own compliance risks thereby succeeding on the fronts of freeing up space for strategic work that reinforces the growth of the entity and motivates employee ownership of compliance risks.
Internal Auditor
According to the Institute of Internal Auditors, internal auditing is “an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations” (Florea & Florea, 2016). The process aids a company to achieve its desired goals by providing an organized, disciplined framework of assessing and enhancing the efficiency of risk management, governance, and control practices. The function of the office is to undertake a risk assessment to plan audit schedules for an organization’s activities. Whereas the internal audit risk assessments do not align with the issues of compliance risk assessments, the function can encompass queries that are mainly of importance to the compliance office. Moreover, a compliance officer resorts to the internal risk assessments (developed by internal auditors) to offer vital insights that inform the chief compliance officer’s own opinion of relative risks. In general, internal auditors offer reliable indicators of risks and methods of how compliance officers can weigh them on initiating compliance programs.
The position is crucial as it offers objective insight, enhances the efficiency of operations (through monitoring and reviewing of process, the office can offer recommendations to increase effectiveness and efficiencies), and protects assets as well as assesses risks. From a biblical standpoint, the internal audit function is vital in the appropriate application of controls across all organizational levels. In reference to the Bible, “12Therefore let him who thinks he stands take heed lest he fall. 13 No temptation has overtaken you except such as is common to man; but God is faithful, who will not allow you to be tempted beyond what you are able, but with the temptation will also make the way of escape, that you may be able to bear it” (1st Corinthians 10:12-13, New King James Version). Therefore, human beings are fallen creatures and no one is exempt from sin. Being a fallen creature is a human condition regardless of economic status, race, age, or educational background. However, to foster trust in an organization, the internal audit office needs to ensure that accountability is undertaken consistently and effectively in organizations (Mihret & Grant, 2017). It, therefore, emphasizes the significance of an internal audit function in an organization to ensure accountability.
Legal Officer
The legal function helps in supporting the compliance programs by guaranteeing the availability of enough advice and evaluating the legal risks associated with non-compliance (Custom Text, 2019). Importantly, the legal officer handles both the external and internal affairs of a company and do all that is within their power to ensure that an organization is out of legal troubles. They are essential in organizations as they offer legal advice through written or oral platforms potential course of action in case of misconduct or violations. The officers also process compliance documents identify risks (by analyzing the decisions and measures adopted by a company, identify optional courses of action, and mitigate risks as much as they can) and direct the workforce. Summarily, the legal function keeps an organization informed of compliance elements and recommends solutions to circumvent the matters.
Conclusion
Controls like anti-fraud processes and internal audits may not be adequate in preventing, detecting, and responding to fraudulent activities. It is for that reason that companies need to ensure that they implement effective techniques to mitigate, identify, and respond to risks. This is through the establishment of a compliance culture that sets the right tone from the top.
References
Custom Text. (2019). Corporate governance & fraudulent financial reporting. New York, NY: McGraw-Hill Education.
Florea, R., & Florea, R. (2016). Internal audit and risk management. ISO 31000 and ERM approaches. Economy Transdisciplinarity Cognition, 19(1), 72-77.
Mihret, D. G., & Grant, B. (2017). The role of internal auditing in corporate governance: A Foucauldian analysis. Accounting, Auditing & Accountability Journal. 30(3), 699-719.
Sampson, S. (2016). The “right way”: Moral capitalism and the emergence of the corporate ethics and compliance officer. Journal of Business Anthropology, (3), 65-86.