What is the Internal auditor’s role when it comes to changes in Regulatory Compliance?
|What is the Internal auditor’s role when it comes to changes in Regulatory Compliance?
The role of Compliance has expanded enormously at most organizations due to the effect of globalization and international growth. In France, for example, Internal Compliance and Control Managers are among the top seven most in-demand jobs. This process has been boosted in recent years by a number of scandals across the globe, often leading regulators to intervene in order to protect stakeholders and the public interest, in turn contributing to an increasingly complex multinational legislative environment.
Regulators lack the resources required to exhaustively supervise all organizations. Therefore, a different approach is being sought after, focusing on self-regulation, implementing a corporate culture of integrity, and employing ethical programs that offer sufficient confidence to all.
In spite of the efforts made, the “ethical blindness” effect – a concept coined by Professor Guido Palazzo (the commercial priorities of an organization push towards bribery and corruption among employees) – will not disappear. It is no surprise that an increasing number of organizations are making an effort to raise their global corporate governance standards and are dedicating more resources to the development of whistle-blowing programs. These programs enable companies to detect and correct internal deficiencies before they become known by the public, thus protecting the value of the interested parties.
Driving force for Regulatory Compliances:
·Ensuring compliances with number of regulations, both domestically and abroad: New regulations places growing pressure on Executive Management and their employees, increasing the possibility that certain compliance requirements may be unintentionally missed.
·Controlling the costs of complying with a growing numbers of regulations e.g. Forthcoming EU GDPR in 2018: Complying to the growing number of regulations increases compliance costs and adds complexity to the internal organization governance and controls structure.
·Developing a strategy to minimize the burden of compliance activities on business operations:
· Ensuring the alignment of compliances operation following a merger or acquisitions: Compliance functions require alignment and consolidation to ensure a holistic and effective approach to integrated corporate compliances.
How Internal Auditor can assists:
· Perform an inventory over existing regulatory bodies and their requirements applicable to the organizations.
· Assess the organization’s approach to managing its global compliances activities, including integration of newly acquired organizations.
·Evaluation the organization’s response to any notable instances of non-compliance.
· Review compliance training programs offered to employees and other stakeholders and evaluate appropriateness for the respective role and geography.
What is needed by Internal Audit:
· Sound understanding of internationally applicable compliance frameworks and assurance standards (e.g. ISO 19600, ISO 37001, COSO) as well as any additional internal, local or global regulatory requirements. (e.g. Sunshine Act, Dodd-Frank Act, EMIR, REMIT).
· Expertise in auditing compliance management systems and drawing a comparison to good organizational business practices.
· Ability to assess the content and delivery structure of any internal or external compliance training programs and tools.
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