What is meant by corporate compliance? Why is it important to follow compliance rules? What is the purpose of corporate compliance?
Why is compliance so important for organisations?
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What is meant by corporate compliance? Why is it important to follow compliance rules? What is the purpose of corporate compliance?
Compliance is what keeps an organization running smoothly in the long run. Any breach in the regulation brings about a lot of legal consequences, lawsuits, and fines which, in turn, creates a bad reputation for the organization. For any institutions in the financial and banking sector, it is very necessary to ensure that they are not attached to any kind of financial fraud or harboring a criminal. In such cases, compliance policies need to be followed to ensure that no illegal transactions or exchanges happen within the organization.
In simple language, compliance is the set of processes an organization uses to ensure that employees and the organization as a whole abide by internal rules of conduct and external rules and regulations. Compliance is important to organizations for many reasons. According to me, the four major reasons are:
Corporate compliance refers to the set of rules and regulations that an organization must adhere to in order to operate legally and ethically. These rules and regulations can come from various sources, such as government agencies, professional bodies, and industry regulators.
Compliance is important because it helps organizations avoid legal and reputational risks. By adhering to compliance rules, organizations can avoid costly fines and penalties, and maintain a good reputation with their stakeholders.
There are many benefits to compliance, but it is important to remember that compliance is not a goal in itself. Rather, it is a means to an end, and the ultimate goal is to create a safe and ethical workplace for all.
Compliances are very important to follow for any organization. Basically, this is all about a set of policies and rules that every human resources including employer have to follow while working in the organization.
Compliances can be categorized in two types – internal and external. Internal compliances are the ones applied within the organization (to employees, managers, associates, partners, etc.) whereas external compliances are applied to organization itself by state or center government.
When we talk about “Corporate compliances”, we particularly focus on external compliances which include the ones introduced by the government, or enforced under the “Labor Law”, or even “Company Act”. You can understand the seriousness of fulfilling the compliances imposed by the government to the organization because failure to it might result in unwanted, or unexpected outcomes (negative).
In some cases, it is seen that companies get closed due to non-compliance of various state rules and policies which include proper documentation or filing or depositing of EPF of employees, or not managing ESI, TDS, Tax on time, non-consideration of gratuity and bonus, wrong CTC, non-compliant HR policy from labor law, employee health and safety, leave, on-time salary, payroll and many more.
Recruiting an HR expert who has a proper knowledge of compliance management can be a good decision for a company to keep itself away from heavy penalties and become Legally-Compliant organization.
Though compliance is not a small term or process as it includes multiple things which needs to be taken care of and only an experienced professional can be the right fit for managing this highly crucial aspect of business operations.