Compliance, the key requirement for building a clean and sustainable business

business compliance

Compliance, the key requirement for building a clean and sustainable business

business complianceCompliance refers to the adherence to rules, regulations, policies, and applicable standards. In the context of business, it entails the organization’s or entity’s adherence to legal requirements, government regulations, internal organizational rules, and relevant ethical standards. 

According to Mr. Buntoro, an Inspector from the Financial and Development Supervisory Agency (BPKP) of the Republic of Indonesia, compliance not only helps organizations fulfill internal acquiescence aspects but also fosters synergy among parties involved in implementing business compliance programs. This means that compliance becomes a prerequisite for collaboration between organizations and their supply chains.

Implementation of compliance within organizations

The implementation of compliance can vary between organizations depending on the industry, region, applicable regulations, as well as the vision and mission of its founders. For example, the regulations in a banking company would certainly differ from those in a mining company.

However, the implementation of compliance within an organization generally begins with the establishment of an internal department that has a specific role in maintaining obedience. The functions of this department or division revolve around five aspects: identification, prevention, monitoring/detection, resolution, and advice. These five aspects represent the necessary steps to protect the organization from risks.

Mr. Buntoro adds that by implementing compliance, an organization takes preventive measures against fraud threats, including corruption, collusion, and nepotism. He also emphasizes the importance of avoiding conflicts of interest, such as in a project tender. By implementing suitable programs, decision-makers are not influenced by personal relationships, bribery, favoritism towards a particular race or ethnicity, or bias towards specific ideologies.

Therefore, the department in charge is responsible for conducting assessments and supervision. Transparency and accountability must also be enforced in every aspect of business or project to prevent detrimental practices.

Compliance and its relation to sustainable business

The implementation within an organization is intricately linked to its core objective of fostering a sustainable business. It is imperative for organizations to ensure deeply rooted synergy within their internal teams and supply chains, thereby establishing business practices that operate with a strong ethical foundation, are environmentally conscious, and drive profitability.

The case of Zara’s supplier being labeled as modern slavery serves as a valuable lesson on how a large company’s reputation can be affected due to a lack of implementation in its supply chain. As a result, not only does their reputation suffer, but investors also hesitate to invest a significant amount of capital. This, in turn, leads to financial losses.

By fostering synergistic collaboration among all elements, organizations can achieve business discipline in a more effective and efficient manner. To ensure that compliance is seamlessly integrated throughout the supply chain, organizations can consider partnering with third-party experts who possess extensive experience in conducting comprehensive assessments.

Collaborating with specialized third-party entities offers several advantages. Firstly, these experts bring fresh and impartial analytics to the process, enabling a thorough evaluation of existing practices and identifying areas that require improvement.  Secondly, their expertise allows for a more comprehensive understanding of regulatory requirements, industry standards, and best practices.

Furthermore, third-party partners can provide valuable insights and guidance regarding the implementation of compliance measures. They can offer tailored solutions and assist in developing robust frameworks that align with the organization’s specific needs and industry context. This collaboration helps ensure that compliance efforts are not only effective but also efficiently implemented, saving valuable time and resources.

As a compliance partner, Integrity Asia offers compliance services such as Audit and Fraud Investigation, Know Your Vendor, Due Diligence, and Employment Background Screening, which will assist your organization in upholding compliance both internally and externally.

 

Adam
Image by rawpixel.com on Freepik

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