In this assessment task, you are required to review your own organisation or the Charity-Care case study, as well as the scenario below, to determine compliance requirements that are applicable. Using this information, you will need to identify and select an appropriate compliance management system for implementation in the organisation. You will use the products of this assessment task to complete Assessment Tasks 2 and 3.
You are an external consultant hired to conduct research into and propose an appropriate compliance management system for an organisation.
- research internal and external compliance requirements
- analyse qualitative and quantitative information to evaluate compliance management options
prepare a report for senior management identifying an appropriate compliance system for the organisation.
Internal compliance requirements
An organization for better management and performance requires a good management and support structure. Organization as a term is a very essential element for a quality system and it is closely connected to all the other components of the management model. However, commitment is required to the regulations within the operational areas. This paper reviews the requirements for a charity care organization and gives an overview of the compliance management systems.
For any organization to operate legally, it must comply with particular requirements concerning the organization’s transactions, safety precautions and also labour practices. Compliance in general terms means working with the behaviour according to the regulation of the statutory bodies(Becker, 2014). All the employees should work in accordance and with regard in abidance of all regulations and the set legal rules, and corporate guidelines. Compliance requirements can be divided into three categories; internal requirements, external requirements and industrial requirements.
Internal compliance requirements
Internal measures of compliance are those that are normally required by the government for any organization to operate. These measures are formed and put in practice by the organization internally by the upper staff of the organization(Benedek, 2012).
Charity care organizations have strict requirements internally which are comprised of forming a board of directors, conducting meetings for example initial and yearly meetings of directors. They are also required to create bylaws and regularly keep updating up dating them(Orbuch, 2006).
Personal informational and data for the clients and beneficiaries should be kept confidential for purposes of economic security and social stigma prevention. The organization is also required to clearly keep and update their records of the transactions and to track for any relevant changes made in the operation standards(Corporate Compliance Office, 2016).
Internal compliance requirements ensure that the organization runs with transparency, integrity and free from any traces and corruption elements.
External compliance requirements
External compliance requirements are those requirements that are imposed and put in action by the government, state or the federal authority. These are endorsed by the state in which the organization is operated(Orbuch, 2006). These requirements include;
Annual report of the activities carried out. The state requires clear reports and records of the charity care organization so as to track of the activities going on in the organization. Upon the submission of the report, a fee is required.
Compliance to “The Fair Labour Standards Act”.Just like for any other organization, the charity care organization has to abide with the rules outlined in the fair labour standards act. These rules include’ the minimum wage pay, pay for overtime and also the standards of recordkeeping for all the workers of the organization.
Industry compliance requirements
Besides the internal and external compliance requirements of the charity care organizations, the industry has an additional compliance requirements. The organization should seek to fulfilled the needs of the community and meet the communicated benefits(Ruppert, 2006).
Compliance to the requirements is very vital for the organization for to run smoothly and to legally meet the set operations. Defiance directly affects the operation and performance of the organization and sprouts into risks and fosters failure of the organization(Becker, 2014).
External compliance requirements
Defiance to the three categories of requirements mentioned above, makes the organization vulnerable the various risks both external and internal risks. The organization is at risk of bleaching the contract of operation issued by the authorities(Bühr, 2016). Failing to meet the some external requirements like for the minimum wage, expenses the organization at risk of managerial problems and coordination among the workers.
For the internal requirements, since there implementation is by the management and the executive; therefore it is the responsibility of that committee to choose the penalty in case of any defiance of the requirements(Bühr, 2016). However, the common penalties include; suspension, probation and also dismissals.
External requirement attract penalties from state authorities. The penalties for external requirement range from small to very serious and big penalties. The most common penalties for defiance of these requirements include payment of certain fees. It can also lead to withholding the activities of the organization and prohibiting their operation.
To minimize the risks involved in compliance to the organizational requirements, the key plays in the implementation should set strategy of implementation. Monitoring systems should be set and clearly evaluated(Ruppert, 2006). There should clear coordination between the organization, the state and employees of the organization.
A compliance management system is an instrument comprising of policies, processes, measures, monitoring and analysing programs, and an audit of a compliance function regarding submission to all applicable rules and regulations. A compliance system is how the organization comes to learn about their responsibilities of compliance and how to ensure that the employees understand these compliance responsibilities(Corporate Compliance Office, 2016).
The compliance system also ensures that the organizational requirements are well merged into the operation of the organization. The system also is to review the organizational operations, to certify the responsibilities are executed with the requirements all met. It adopts any corrective actions and updates the materials as necessary.
Effective compliance systems are usually made up of three interlinked and interdependent components.
- The board and management oversight. This takes the responsibility of evolving and controlling compliance systems which meet with the internal compliance requirements. The success of a compliance system for an organization is dependent on the board.
- The compliance program. This ensures efficient and successful administration of the organization. The compliance program is made up of policies and procedures, training and monitoring.
- The compliance audit. This is an autonomous review of organization’s compliance with its requirements. It checks whether the organization is adhering to its internal policies and procedures and aids management to identify compliance risk conditions.
To effectively implement a compliance management system, a high level organizational personnel should be employed to exercise effective oversight. They should have direct reporting authority to the managing body(Andrukonis, Management and Division, 2010). The personnel must have full responsibility for the daily operations of the programs of compliance. They should also be entitled to ready access the executive and the board to report any cases of misconduct and violation of the rules and regulations.
To meet the organizational requirements of a compliance management system, a collective effort should be taken within the organization. Information has to be moved on from the board of executives to the employees(Claudio, 2012). Some compliance regulations require training to effectively pass on the need of meeting these requirements to all the employee.
Therefore, reasonable training and practical steps should be adopted in passing on the information concerning the organization’s program of compliance accompanied with its policies, procedures and processes. The information can be passed on through memos, letters and verbal communications from the top leaders of the organization to the employees(Claudio, 2012). Training may sometimes even be through informal meeting of the staff.
All the key players within the organization should receive the appropriate and recommended training. Training should be given to the governing body, high level executives, employees, and even to agent of the organization.
Establishment of the system
There are several steps involved in establishing an effective compliance program
- Identifying the purpose and the mission of the compliance program. Good and effective compliance programs support organizational governance, and they also an effective risk management systems. They ensure overall compliance with the set regulatory requirements, both locally and internationally. Effective compliance programs also enables the organization to check its internal policies and their operations, and also aids in promoting effective and proficient internal tools.
- Knowing the ethical culture of the organization. In the establishment of an effective compliance system, the organization should set up training programs guarantee comprehensive reporting and give a full accountability by the executive. However, despite of the hard situations that may go on within the organization, a culture committed to ethics and compliance should be developed.
- Identifying the gaols and objectives of the organization. The organization should set up a compliance system that; can identify boundaries of legal conduct that can affect the organization both internally and externally, guarantees addressing goals and objectives of the organization.
- Identifying the risks which are related to the goals and objectives of the organization. This can be done by taking a survey.
- Creating accountability chart. This shows the commitment of management and board of directors to meeting the requirements and also shows the authority defines the roles of each player in the implementation process. There is also need to establish the middle management that aids in connecting the executive team and staff employees.
- Developing effective management plan. This responds quickly and lessens the possible impact of risks to the organization
- Implementation of a constant monitoring and advancing program. This helps in aligning the goals and objectives of the organization. It measures the performance and provide strategies for effectiveness of the system.
The effectiveness of the compliance can be measured by getting feedback from employees and management to help in measuring the impact of the system. This is done by conducting surveys that focus on organizational management and employees’ perception about the compliance system. Developing metric systems that can easily be reported and assumed by the management.
Results and analysis
The feedback collected can improve the system and aid in meeting organizational goals and objectives. It involves participation of all the key players and therefore all them easily understand and pursue similar goals.
A regulatory compliance system is useful for any organization because it enables to handle risks, promote transparency, improve accountability and to also to reduce compliance costs. Adhering to the organizational requirements does not only improve reputation but also leads the organization to attaining its set objectives.
Therefore, organizations should review their external, internal and industrial compliance requirements so as to improve their performance.
Andrukonis, T., Management, E. and Division, C. 2010. ‘Elements Of An Effective Export Compliance Program’.
Becker, C. F. 2014. ‘Compliance Management System ( CMS )’, (October), pp. 1–15.
Benedek, P. 2012. ‘Compliance Management – a New Response to Legal and Business Challenges’, 9(3), pp. 135–148.
Bühr, D. L. 2016. ‘Risk and compliance management systems’, pp. 16–17.
Claudio, D. 2012. ‘Developing and Implementing an Effective Ethics and Compliance Training Program Developing and Implementing an Effective’, pp. 1–17.
Corporate Compliance Office .2016. ‘Compliance Management System’, (October 2013), pp. 1–11.
Orbuch, D. 2006. ‘Charity Care and Your Organization’:, HCCA Audio Conference, February(15).
Ruppert, B. M. P. 2006. ‘“ Roles and Responsibilities – Corporate Compliance and Internal Audit ”’, (2).
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