COMPLIANCE - A CRITICAL FUNCTION OF RISK

The global financial meltdown has left in its wake an environment of greater scrutiny of organisations with substandard compliance and ethics programmes. Directors, officers and members of the board who neglect their fiduciary duty will be held accountable due to the increase in and enforcement of legislation.

Organisations typically view compliance as an additional process or silo function operating alongside their risk functions, rather than a strategic business objective which is integrated within the organisation's risk management structures. “This fragmented approach limits visibility across the entire organisation” cautions Terry Booysen, Chief Executive Officer of CGF Research Institute (Pty) Ltd, a member and strategic partner of Proudly South African in a joint communiqué with Africa.

Failure to manage compliance risk can be due to lack of time and resources, expertise, change management process and most importantly; failure to entrench compliance processes into the business' operations and embed compliance within the corporate culture i.e. making compliance a function of line management.

According to Booysen and Phillip Tillman of Cura a robust compliance programme should have the following criteria components as a minimum:

  • Simplicity: Plain language descriptions of relevant legislation and processes
  • Accuracy: Ensure that the information is accurate and cannot be amended without an audit trail
  • Accountability: Make sure that responsibility is assigned to the correct process owner, therefore ensuring compliance is embedded operationally
  • Automation: Be wholly entrenched in a business, by implementing an automated and user friendly system
  • Transparency: Eliminate the “silo” effect by avoiding the creation of individual processes that fail to incorporate the processes in other business units. This ensures transparency throughout the business
  • Reporting: Report on the progress of the programme to the relevant stakeholders for review. These reports must be used in risk analysis and should influence any business decisions that are made
  • Audit: Every detail of the transaction must be available and changes of any kind must be tracked throughout the compliance process.

For more information contact:
Terry Booysen, CEO, CGF Research Institute (Pty) Ltd on Tel: +27 (11) 476-8264/1; Cell: +27 82 373 2249; Fax: 086 623 1269; Email: tbooysen@cgf.co.za, or visit www.cgf.co.za / www.corporate-governance.co.za

or

Philip Tillman, Head: Africa, Cura - Governance, Risk, Compliance & Performance Management Software on Tel: +27 11 483-7643; Fax +27 (11) 676 0064; Email: Philipt@curasoftware.com or visit www.curasoftware.com
 
 
 
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