Developing a framework for your firm made easier by following these steps Featured

5:05pm EDT June 1, 2013
Victoria Tifft Victoria Tifft

Understanding the critical role that compliance plays within a firm is a fundamental cornerstone for successful leadership. The changes in government regulations over the past several years affect all businesses and require a higher level of compliance and oversight. 

Regulations governing the management of staff, reporting of financial information, environmental impact, stock transactions, and adherence to regulatory authorities must be complied with or the business could face legal charges.

Following the steps below will aid in the creation of your firm’s compliance framework:

Identify requirements first

Make a list of each of the compliance areas for your entire company. This should be a collaborative project so meet with each of your managers and ask them to compile requirements for their area.

Document compliance deadlines and data

Once requirements have been identified, make sure you document them in one place. List the compliance requirement, timelines and dates for reporting data, and the person responsible for reporting.

Listing the information in a spreadsheet allows for rapid sorting of upcoming due dates.

Assess compliance status

Now that you have a comprehensive spreadsheet, ask your team to assess whether or not the processes or tools you currently have in place are adequate to assess the areas where you have gaps. Develop a plan to address the gaps that need to be fixed.

Establish compliance risk/escalation policy

Identify thresholds for compliance ranges and establish a policy for personnel to notify management when thresholds are out of range.

Assign oversight responsibility

Have an individual in your firm oversee managing the compliance document. This person should be familiar with the compliance timelines in the document and check in with responsible parties to ensure that compliance requirements and reporting activities are on target. The person can also be the point of contact for personnel to notify when escalating compliance risks.

Establish compliance audit programs

Once your compliance structure has been developed, establish an audit program. This can be internal as well as external and is usually conducted on an annual basis.

For internal programs, set a time for senior management or experts within the firm to perform a “mock audit” to review various areas of the firm that fall under the compliance program. These internal programs may suffice, however, when there are times that business leaders want outside opinions.

At that point, consult with a firm that has expertise in the compliance area and ask them to conduct an informal audit.

Create a continuous improvement process

Establish a process for analyzing the results of each internal or external audit. Determine whether or not the firm will invest time and energy to fix the gaps found during the audit.

Evaluate the compliance plan yearly

Review your compliance plan on an annual basis. This review should be conducted with the staff involved in the compliance areas. The annual review should include another assessment to identify areas where gaps or inefficiencies exist for compliance areas.

Business leaders have a responsibility to ensure that their firms comply with requirements. Establishing and implementing a structured compliance framework to assure that requirements are adhered to is a sign of proactive, responsible leadership.