In an economic and social scenario in which transparency is increasingly required, it is essential to work with the concepts of Risk Control and Ethics. This premise applies to large corporations as well as small ones. But how to be truly transparent daily? It is precisely for this mission that Corporate Governance and Compliance practices serve.
Having Governance practices helps the company prove its commitment to ethics. In addition, when the business maintains an active Compliance area, this results in risk prevention and knowledge of its internal control system.
To avoid risks, we use controls, that is, we use procedures to prevent any problems. Ethics is the common thread that permeates the culture of control. In other words, being ethical is basic to having Compliance.
In other words, having Compliance is knowing the rules, following the recommended procedures, acting on by-laws and safety recommendations, etc. Want to know more? Understand in this post the importance of Corporate Governance and Compliance right now!
What are Corporate Governance and Compliance?
Corporate Governance and Compliance are two interdependent concepts, but with different meanings. Thus, we can say that they complement each other.
Compliance is the department that ensures compliance with internal and external laws and regulations. In turn, Corporate Governance is linked to the relationship with partners in the business chain. Thus, it includes the way the company deals with employees, government, supervisory bodies, suppliers, customers, etc.
What are the principles and pillars of Corporate Governance and Compliance?
In addition to healthy management, Corporate Governance and Compliance practices allow for reducing the incidence of fraud.
In the market, the pressure to increase safety and ethical conduct is increasing. Therefore, there are already well-defined principles and pillars for the two concepts. These criteria were designed over the years based on the experience of several companies.
Compliance principles and pillars
- Proactive management support: managers are like conductors in orchestras. Thus, without them, adopting any compliance intent is impractical, for obvious reasons;
- Threat monitoring: the methodology uses risk analysis to perceive changes in behavior and contexts in their niches of activity;
- Codes of ethics and way of acting: compliance provides for the preparation of a manual with the internal rules of behavior. Thus, the document makes clear what is inappropriate and what must be done;
- Preparation: employees need constant training. In this way, the company ensures that compliance rules are not forgotten;
- Ombudsman for complaints: the company assumes the responsibility of providing channels for receiving complaints that guarantee the confidentiality of informants. It is essential to guarantee the anonymity of the authorship of the revelations of irregularities.
- Surveillance and control: compliance with established standards by employees and suppliers must be permanently monitored and tested. To do so, carrying out external and internal audits is one of the most chosen measures.
Principles and pillars of Corporate Governance
- Transparency: results, internal and external rules, working models, costs and profit must be disclosed regularly and clearly. This includes making all material available for quick and easy consultation;
- Equity: the company must offer equal conditions to people who perform identical functions;
- Accountability: Corporate Governance requires the regular presentation of financial statements to those involved in the business;
- Corporate responsibility: adopt good management practices and ethical principles.
Therefore, we can say that Corporate Governance and Compliance go hand in hand. With them, companies will be able to demonstrate that they have a business with integrity and reputation.
This content is meant for information only and should not be considered as an advice or legal opinion, or otherwise. AKGVG & Associates does not intend to advertise its services through this.