We all know compliance regulations can be difficult to keep up with. It is especially so in a COVID era where regulations are constantly changing. Hence, it is crucial to have a compliance officer in your organisation to keep your firm on track with the compliance standards.
What is compliance?
Before we look into the roles and responsibilities of a compliance officer, let us briefly understand what compliant means.
According to the International Compliance Association (ICA), there are two levels of compliance.
The first level of compliance looks at “compliance with the external rules that are imposed upon an organisation as a whole”. This refers to the compliance standards and regulations established by the government on the company. For instance, the Competition and Consumer Act (CCA) in Australia outlines how a firm should behave to ensure fair trading practises.
The second level of compliance delves deeper into the company itself. It requires “compliance with internal systems of control that are imposed to achieve compliance with the externally imposed rules”. To achieve this tier of compliance, you can adopt a compliance management system!
The presence of such a software can help to streamline compliance management, and address any potential risks your company may face.
Now you may wonder, “If I already have a compliance software in my company, do I still require a compliance officer?”. The answer is yes! We’ve seen how volatile regulations are. Thus, having a personnel to oversee compliance, and manage the software can prevent your organisation from derailing the compliance directives.
Roles and responsibilities of a compliance officer
A compliance officer manages their organisation’s compliance in accordance with the internal standards of the company and regulations set by the government.
We can divide a compliance manager’s role in two tiers, similar to compliance.
The first tier of a compliance manager’s responsibility involves ensuring the company’s operations are in line with the external compliance regulations. They achieved this by having an understanding of the latest regulations, compliance standards, and how the company operates.
Coupled with active communication with stakeholders such as the management and staff personnels, the officer can have awareness of the possible regulatory breaches. This allows them to effectively manage risks which reduces the probability of your organisation flouting compliance obligations.
The second tier of responsibility requires the compliance officer to oversee the compliance department, as well as the compliance management system. For a firm to achieve total compliance, the internal processes should correspond with the external regulation requirements.
By heavily involving themselves in certain aspects of the compliance software, compliance managers can achieve greater overlap between the internal and external processes. There are three elements within a compliance system, out of which, two of them are led by the compliance officer. They are namely compliance program and compliance audit
Within a compliance program, various sub-components are embedded to support the overall structure. Some features include the establishment of procedures and policies, consumer complaint response, and training.
A compliance manager starts off by gathering inputs from relevant departments and individuals. After accomplishing the initial step, they proceed with setting up the guidelines to address the following questions:
- How can the organisation hold employees accountable to the compliance policies and procedures?
- Is it convenient for the relevant stakeholders to retrieve compliance related information when required?
- What are some compliance goals the organisation wishes to achieve?
Beyond designing the program, a compliance officer also oversees employees’ compliance training. Such training ensures employees are updated with the latest regulations, which aids them in making informed decisions and managing consumers’ complaints.
Compliance monitoring and audit
Another large area of compliance which falls under the care of a compliance manager is compliance monitoring and audit. The areas performed by the officer include regular checks and auditing of the compliance processes within a firm.
To break it down further, we categorise compliance audits into internal and external audits. The main difference between the two forms of audits lies in the identity of the personnel auditing.
Employees within the organisation, such as the compliance officer, conducts the internal audits. Such an audit measures your company’s objective against output and strategic risks. Furthermore, it is used to assess whether the firm is in line with the firm’s compliance guidelines.
Based on the outcome of internal audits, the management will have a better understanding of the company’s position. This allows them to identify areas of improvement and craft strategies and tactics accordingly.
As its name suggests, external audits are performed by independent third parties. Companies use this form of audit to determine if the firm is operating in accordance with the government regulations. The third party auditor may also evaluate the company’s compliance efforts using internal audit reports.
Conducting an annual audit is important. Not only does it help you assess and identify potential hazards, but also increase your firm’s accountability.
Types of compliance jobs
Compliance roles are pivotal, and that is why it exists in various industries. Here are some fields a compliance officer can work in.
We all know how strict compliance regulations are in the healthcare industry. With sensitive information such as medical records and personal information in hospitals’ databases. This translates to patients’ privacy being regarded as one of the utmost compliance priorities. Moreover, the ability to safeguard such information has a direct impact on a hospital’s reputation, and patient’s perception on the quality of care.
Given there is a greater emphasis on privacy, the standards for data protection have increased significantly. Consequently, the aftermath of a security breach would also include hefty fines and penalties.
This is where the compliance manager steps in. They create processes, policies and systems to safeguard patients’ information. Moreover their role includes keeping their hospitals stay on track with the standards, such as the one set by Therapeutic Goods Administration (TGA).
Information technology (IT)
Similar to the healthcare industry, privacy protection is a key area of focus within the IT industry. As we rely more on technology, information and privacy breach becomes increasingly common. The lack of a compliance system could lead to oversight and pave the way for potential risks in businesses.
Both the government and the IT industry have set up some standards for compliance to overcome IT related threats. For instance, Essential Eight is used in Australia to mitigate cyber security risks. Australian businesses that accept card payment also have to comply with industry regulations such as the Payment Card Industry Data Security Standards (PPI DSS).
There are many more regulations within the IT sector. Therefore having a compliance management system and a compliance officer is important in combing out the different guidelines and ensuring organisational compliance.
After the 2008 Financial Crisis, regulators and stakeholders placed greater emphasis on compliance. Besides the implementation of a compliance system, compliance officers also look at the various requirements for investments, bonding, financial reporting and more.
Customer identification, also known as the Know Your Customers (KYC) rule, could also be a part of the officer’s role where verification of their client is required. This allows compliance manager to spot potential suspicious transactions, and mitigate the risk of their organisation from money laundering or terrorism financing exploitation.
In Australia, there are 4 main financial regulatory agencies a compliance expert should know. They are namely the Australian Prudential Regulation Authority (APRA), the Australian Securities and Investments Commission (ASIC), the Australian Treasury and the Reserve Bank of Australia. These agencies are coordinated by the Council for Financial Regulators (CFR).
Given the sector’s nature, financial compliance is complicated and messy. From banking to investment, varying regulations exists. Thus the presence of a financial compliance officer is pivotal.
Skills required of a compliance officer
Now you understand the different types of compliance managers and their responsibilities, let us take a look at the various skills an officer should possess!
Having great communication skills (both verbal and written) is what most employers look for in their employees. The job profile of a compliance officer is no exception.
Although a compliance manager is the one spearheading an organisation’s compliance, it is impossible to safeguard it alone. The officer frequently collaborates with various stakeholders and departments for varying purposes. This implies there is extensive communication between compliance managers and others.
For example, a compliance manager may conduct employee and management compliance training. With communication skills, concise messages can be delivered to employees of the company which promotes understanding.
Besides communicating, interpersonal communication is a two way process which involves listening. When a compliance manager listens, he or she is able to gather feedback from stakeholders such as employees, auditors and even third-party service providers. This allows him or her to understand the various perspectives and help create a more efficient compliance system for the company.
Orgnisations expect compliance managers to identify the potential risks within the business operation. Hence, the ability to assess risk is one of the essential skills a compliance manager should be equipped with.
However, in order for the officer to evaluate risk efficiently, he or she needs to have knowledge about the industry compliance standards and organisation’s operations. These are the suggested steps a compliance officer can take when conducting a compliance risk assessment:
- First step: Identify the risks
- Second step: Evaluate the risks, consider possible outcomes, and its impact on the various stakeholders
- Third step: Prioritise high-level risks
- Fourth step: Implement control measures and validate its effectiveness through testing
- Fifth step: Monitor, test, re-evaluate and update control measures
Along the way, the manager can record his or her findings for future references.
More often than not, data comes in the form of alphanumerical. Thus statistical analysis is a bonus skill for officers who want to up their risk assessment game.
There are many issues a compliance manager has to solve. They can range from vague regulations, operational issues to corruption and more. There is also the possibility of internal resistance to compliance process changes. That is why problem-solving is a key skill the officer should possess.
The two broad ways a manager can go about solving a problem involves creative and analytical thinking. The creative aspect looks at one’s ability to think out of the box. On the other hand, analytical thinking looks at the hard facts of an issue and potential solutions. It also includes a compliance manager’s past experience and wisdom.
Along with problem solving skills, one should equip him or herself with the ability to work under pressure. Sometimes, companies need to address an urgent issue presents within a short time frame. This places a huge pressure on the compliance officer to solve the problem while leading the team. As such, the ability to stay calm during stressful situations becomes important.
We have extensively used technology in various aspects of our lives, and businesses are no different. To ensure organisational compliance to the regulations set by the government, implementing a compliance management system is insufficient.
You will need a compliance officer to help with the numerous processes and safeguard your company’s compliance policies.