managing legal compliances….to your organization ? are you confident while signing the legal...
Post on 09-Jul-2020
4 Views
Preview:
TRANSCRIPT
MANAGING LEGAL COMPLIANCES….
INITIATIVE TO BE ON RIGHT SIDE OF THE LAW
Enabling compliance reporting
E-enablement of compliance reporting
Corporate Compliance Quotient
Need for legal compliance
Agenda
Need for legal compliance
4
IFC
Clause 49
IFRS
IS Governance
Sarbanes-Oxley
Directors’ responsibilities
Fraud risk
Environmental risk
OH&S
Basel II
The changing regulatory landscape
J-SOX
Tax risk
Ind AS
Contract Risk
India..…. Era of Corporate Governance
5
1998 1999 2002 200420032000 2001
MA
TU
RIT
Y/
SU
ST
AIN
AB
ILIT
Y
INITIATIVES
CII
Kumar Mangalam Birla Committee
Clause 49
DCA - Task Force On Corporate
Excellence
DCA Report
Narayan Murthy Committee
Naresh Chandra Committee
2013
Amended clause 49
IFC
2015
Listing
Agreement
2015
What the world has faced
6
► Ensure that business and operations is conducted within the precincts of
rules and regulations:
► Keep the company out of trouble
► Avoid prosecutions, penalties and fines
► Foster the image of the company as a responsible corporate citizen
Regulatory
Need
Business
Need
Need for legal compliance
► Clause 49 reporting on legal compliance
► The Audit Committee shall mandatorily review reports relating to
compliance with laws
► The Independent Director shall periodically review legal compliance
reports prepared by the company as well as steps taken to rectify
instances of non-compliance
7
Companies Act 2013 requirements
8
Section 134(5)(e) - The directors, in the case of a listed company, had laid
down internal financial controls to be followed by the company and that
such internal financial controls are adequate and were operating effectively
Section 134(5)(f) - The directors had devised proper systems to ensure
compliance with the provisions of all applicable laws and that such
systems were adequate and operating effectivelyDirectors
responsibility
statementSection 134(3)(q), sub-rule 8(5) - “In addition to the information and details
specified in sub-rule (4), the report of the Board shall also contain: …“the
details in respect of adequacy of internal financial controls with reference to
the financial statements.”
Explanation - For the purpose of this clause “Internal Financial Controls” means the policies and
procedures adopted by the company for ensuring the orderly and efficient conduct of its business,
including adherence to company’s policies, the safeguarding of its assets, the prevention and
detection of frauds and errors, the accuracy and completeness of the accounting records, and the
timely preparation of reliable financial information.
Section 134(8) – contravention punishable with fine which shall not be less
than Rs. 50,000 but which may extend to Rs. 2,500,000 and every officer of
the company who is in default shall be punishable with imprisonment for a
term which may extend to 3 years or with fine which shall not be less than Rs.
50,000 but which may extend to Rs. 500,000 or with both.
Entity Level Controls (ELC)
9
Business Risk
Management
Whether risk management policy and procedures are in place? Whether formal risk
assessment has been carried out or not?
Business Ethics
FrameworkWhether whistle-blower policy and Code of conduct exists and implemented ?
Internal Audit and
Financial Integrity
Whether internal audit function is independently reporting to Audit Committee?
Whether roles and responsibilities of senior management is defined and
documented? And Whether adequate segregation of duties exists?
Legal Compliance
Framework
Whether legal compliance framework is documented and compliance health to
checked on periodic basis?
Fraud Risk
Management
Whether Fraud Risk Management policy exists, detailing structure of fraud
deterrence, prevention and investigation, fraud incidence response guidelines.
Whether Key controls to mitigate fraud risks are identified and monitored for
compliance on regular basis.
Business
ContinuityWhether Disaster Recovery Plan, Business continuity plan and crisis management
policy defined and implemented?
Succession
PlanningWhether formal process of succession planning defined and implemented?
Management
Operational Review
Whether formal process management oversight and review mechanism exist and
followed?
ELC Component Requirement
Corporate Compliance
Quotient
Are you aware of all
important laws applicable
to your organization ?
Are you confident while
signing the legal
compliance declaration ?
Does your organization
have a compliance officer ?
How do you prevent/
track legal non
compliances?
Who tracks legal cases in
your organization?
Have you answered all the questions in affirmative ?
What’s your corporate compliance quotient
11
Challenges in legal compliances
Compliances are required to be made against law on an
ongoing basis
Non compliance may lead to imposition of penalties and
fines on the company and/or its officers
Public knowledge of non compliance with statutes
adversely impacts the company’s brand image
Certain non compliances may lead to
- Revocation of operating license
- Sealing of premises
- Imprisonment of key officers
- Freezing of bank accounts
12
Enabling Compliance
Reporting
Identify
applicable
laws
► Identify applicable laws, statutes, etc. at a pilot location
► Extend the project in a phased manner across principal locations of
the company
Assign
ownerships
for
compliance
► Identify personnel responsible for complying with applicable laws
► Identify reporting and reviewing mechanism of compliances
Launch and
deploy an IT
workflow
solution
► Deploy an online workflow solution to :
► Alert & guide users on the requirements & seriousness of
compliances
► Provide on demand holistic view of organisation-wide
compliance via dashboards, trends and MIS reports
► Automate workflow minimizing manual interface through online
alerts, surveys and reporting
Steps for enabling compliance reporting
14
An Integrated legal compliance framework
• Formal compliance organisation structure
• Listing of all applicable laws and statutes
• Clearly defined roles, responsibilities & accountability
• Compliance monitoring and reporting mechanism
• Structured approach towards ensuring 100% legal
compliance
A legal compliance framework is a comprehensive solution to ensure compliances
15
Benefits of an integrated legal compliance framework
• Determination of applicability of statutes, laws
and enactments in terms of:
- Specific requirements
- Periodicity of compliance
- Implications of non-compliance
• Standardized compliance procedures across
the organization
• Defined escalation procedures
• Formal guidance to individuals entrusted with
the responsibility of execution
• Periodic review through reports and MIS
16
Key Elements of Legal Compliance Framework
Repository of applicable laws and statutes1
Policy and strategy for legal and
regulatory compliance2
Legal compliance organization structure3
Clearly defined roles, responsibilities &
accountability5
Procedures for ensuring complete legal
compliance4
Non compliance severity categorization6
The Legal Compliance Framework can also be e-enabled
17
Components of Legal Compliance Framework
Legal Compliance Framework
Compliance Manual Compliance StructureCalendar of Key
Activities
Compliance Reports
Legal Compliance Database & Reports
Compliance Database
(Regular & Significant)
18
Compliance manual
• The Legal compliance framework manual contains the following
information:
– Need for an integrated legal compliance framework
– Purpose of the framework
– Reporting structure for legal compliance
– Overall Process flow of activities
– Roles and Responsibilities of individual users
• The Manual will have separate sections on regular and event driven
legal compliances each of the section contains the following:
– Structure of master database;
– Data entry templates;
– Data validation templates;
– Alert templates; and
– Compliance report templates
19
Compliance structure
Board or Directors / Audit Committee
Chief Compliance Officer
(The Company Secretary)
Compliance officers from each department
Projects Commercial Technical Finance Personnel
Compliance Owners
Monthly Updates
Monthly Updates
Quarterly Updates
Legal Compliance
Structure
•The Legal
compliance
structure will be
supported by a
legal compliance
database
maintained by a
database
administrator.
•The database will
provide periodic
alerts and will be
used to input
compliance
information.
Regional offices Corporate Office Project Sites
20
Calendar of Key Activities
21
Compliance database
Compliance
Database
•The Compliance
Database will be
co-developed with
appointed /
designated legal
experts.
22
Compliance reports
Statute groups Projects Finance Commercial Personnel Technical Compliance
Requirement
(having severe
implications)
Implication Business
Head
Action
Plan
Action Plan
Status
Labour Laws Executed
Industrial Laws N.A N.A
Direct Taxation Executed
Indirect Taxation Executed
Corporate Laws Executed
Environmental Laws Executed
IPR Laws N.A N.A N.A N.A N.A
Employee related Laws Executed
Other Laws Executed
Compliance Summary
The Chief compliance officer prepares a summary of Non-compliances and delayed
compliances having severe implications for review by the Board/Audit Committee
23
E-enablement
of compliance reporting
Online legal
compliance
dashboard
Surveys inputs
Compliance
Questionnaires
Compliance owners
Compliance
Questionnaires
Legal Checklists Legal Checklists Legal ChecklistsKey Steps
Process for reporting
Identify
Compliances
Circulate
online
compliance
feedback
Seek and
report inputs
from
compliance
owners
Online tool for
compliance management
Online compliance reporting – the framework
25
Thank You
Sidheshwar Bhalla
Director
Deloitte Haskins & Sells LLP
Email ID: sibhalla@deloitte.com
Contact No.: +91 989978 7786
top related