The concept of corporate compliance has become increasingly relevant in the corporate world, driven by the growing complexity of legislation and the search for ethical and transparent management. In addition to avoiding fines and reputational damage, organizations have other benefits from adopting a policy of this kind.
In this article, we're going to explore in depth one of the main branches of compliance: corporate compliance. You'll learn about the definition of the topic, the responsibilities it encompasses and some suggestions for initiatives that companies can adopt. Have a good read!
What is corporate compliance?
A policy of compliance can be defined as a set of rules adopted with the aim of keeping the company in compliance with legal norms and good practices in its sector.
There are several reasons why a company benefits from adopting a corporate compliance program: maintaining good relations with control bodies, guaranteeing its credibility in the market, avoiding legal action and creating a healthy environment for its employees.
After all, every talented professional wants to work for a company with a good image in the market and which manages to stay away from tax evasion scandals, for example. In this sense, adopting a compliance policy helps to attract (and retain) top talent.
What are the types of compliance?
Comprehensive as it may be, corporate compliance is not the only type of compliance. Check out the main differences between them:
- tax compliance - refers to practices related to taxes and choices tax of the company. Through it, it will be possible to create policies that prevent illegal activities and ensure compliance with the legislation applicable to the sector;
- tax compliance - involves implementing mechanisms to comply with tax obligations, such as issuing invoices, among other requirements;
- labor compliance - relates to the company's obligations towards its employees, including the payment of salaries, benefits and other labor rights. This practice is fundamental to ensuring compliance with the law and, at the same time, attracting and retaining talent;
- social and environmental compliance - encompasses good relationship practices with society and the environment, seeking to minimize environmental impact, promote sustainability and contribute to social development;
- legal compliance - refers to compliance with the laws applicable to the company's operations, including within the digital environment, encompassing the company's operations on the internet. Failure to comply with these laws can lead to legal problems and damage to the company's reputation. It is important not to confuse legal compliance with tax compliance;
- corporate compliance - As we have seen so far, this modality covers the set of internal rules and controls that the company must implement, as well as adapting to the external standards that are relevant to the business.
Although they may not be suitable for every type of business, understanding the different types of compliance is fundamental for a company to be able to choose efficient compliance policies and internal controls.
What are the 6 corporate compliance policies your company should adopt?
There are several practices that can be cited as examples of the successful application of the concept of corporate compliance. Check out some of our suggestions!
1. Code of Conduct
A code of conduct determines the standards of behavior expected of all a company's employees and leaders. In this sense, it is a fundamental policy for guaranteeing the alignment of objectives, combating faults and fraud and ensure mutual respect between the professionals who make up the business.
Some examples of rules in a code of conduct are as follows:
- definition of organizational principles and values - it will be possible to determine the company's values and mission unequivocally, as well as the expectations of ethical behavior applicable to all team members;
- gifts and hospitality policy - helps define the acceptable limits for receiving and offering gifts and hospitality in the professional sphere.
- adoption of standards for the use of corporate resources - With this, it will be possible to establish rules for the correct and responsible use of company resources, including equipment, information and working time.
- managing conflicts of interest - it will be possible implement a system for the identification and effective management of situations that constitute a conflict of interest.
An important detail is that the code of conduct must be clearly written, accessible and objective, but also comprehensive. After all, it should include information on respect for the law, the desirable attitude of employees in the workplace, among other topics.
2. Third-party due diligence
This is a process whereby a detailed analysis of suppliers, partners and service providers is carried out, so that you can be sure that they also operate in accordance with the laws and regulations applicable to your company.
Due diligence helps mitigate risks associated with third parties and ensure that they share the same ethical standards. If an undesirable pattern of conduct is identified, it will be possible to terminate a partnership, for example.
3. Implementation of whistleblowing channels
It is possible to create confidential whistleblowing channels through which employees, partners and clients can report violations of internal rules or external laws.
It's a good idea for them to be anonymous, so that these channels really encourage transparency and help to identify problems preventively.
4. Creation of a Anti-Money Laundering (AML) policy
Another good policy is to adopt procedures that prevent the company from becoming involved in illicit activities, such as money laundering. This can be done by monitoring financial transactions and working together with the competent bodies to expedite complaints.
5. Compliance training
To increase employee awareness of the issue, the company can offer periodic training on topics such as ethics, anti-corruption, governance and fraud prevention.
These trainings ensure that employees are up-to-date and trained to enforce compliance measures.
This is especially important in organizations where employees have more autonomy and don't always have the opportunity to contact a supervisor to find out how to react in a given situation.
6. Internal audits
Carrying out regular audits to assess compliance with internal policies, laws and regulations is key to identifying flaws, possible fraud and even areas for improvement.
It is worth noting that compliance practices must be integrated into the day-to-day running of the company in order to strengthen corporate governance and mitigate legal, financial and other risks. reputational.
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What are the advantages of corporate compliance?
After learning about the concept and some of the policies, there's nothing better than knowing the advantages of adopting a corporate compliance policy in your business. Check them out!
Gaining credibility in the market
A robust compliance program raises the company's reputation in the eyes of the market, inspection bodies and clients, as well as consolidating confidence in its operations.
By establishing a quality standard for internal procedures, the company positions itself in a transparent manner, facilitating inspection and ruling out suspicion.
In addition, compliance promotes a culture of transparency, a fundamental aspect of building solid and lasting relationships with all stakeholders - in other words, all the people who are part of the company's ecosystem.
Increased competitiveness
This benefit is directly linked to the previous one. Companies that manage to ensure tax compliance and adopt good governance practices become more trustworthy for potential partners.
With the best partners in the market putting their trust in you, your company is likely to reap the rewards and grab a bigger share of the consumer market.
This advantage can even be exploited in marketing campaigns and advertising campaigns. After all, a company that complies with the legislation applicable to it should be proud of itself.
Productivity gains
A corporate compliance policy defines well-defined roles for employees and the company. accounting team. With employees aligned and aware of what they need to do, it will be easier to keep sensitive documents in order, for example.
Imagine that your company is visited by a representative of the tax authorities for an audit: is everything that needs to be presented in order? If the answer is no, some of your employees will have to take time off from their current tasks to remedy the problem.
That's why a corporate compliance program helps the team's productivity. Keeping up to date with tax obligations ensures that core activities can be carried out faithfully, without major interruptions.
Spreading a culture of organization
Adopting corporate compliance practices makes a company more organized. This also has an impact on other internal processes, which are conducted with the same discipline and rigor.
When employees and leaders see the good results generated by a compliance policy, they will also want this influence in other aspects of their work. In this sense, it is no exaggeration to say that compliance leads to the dissemination of a culture of organization and the revision of flawed processes.
Possibility of adopting new technologies
Various solutions have been adopted in the compliance field, such as management systems, artificial intelligence tools and data analysisamong others. By implementing them in your business, you modernize it and allow employees to become familiar with technologies that increase productivity.
As we have seen in this article, adopting a corporate compliance policy is a way for companies to maintain tax compliance and avoid problems such as fines, sanctions and reputational damage. There are also other benefits, such as increased competitiveness.
If your company needs specialized assistance, with experienced consultants able to provide the best strategies for your business to improve its financial performance, get to know CLM Controller's solutions now.
