What is Legal Compliance Reporting? Read on to find out

The word Compliance means to comply with the prescribed rules, regulations, laws and standards that are applicable to a Company or businesses. Confirming to Compliance provide a way to the company to adhere to the regulations for environment, Labour, finance, accounting, etc. Compliance not only helps in preventing problems but it also creates a positive impact on a business or organization. Compliance also refers to adherence of internal and external standards. To comply with the applicable laws, rules, regulations and standards, compliance management is necessary.

Important areas of Legal Compliance

Compliance consists of two important areas such as:

• Regulatory Compliance- It refers to the compliance of relevant external laws, regulations and guidelines, etc. by the organization.
• Corporate Compliance- It refers to the compliance with respect to relevant internal policies, procedures, etc. with the help of actions and programs that an organization sets.
  Both the types of compliances are important and beneficial to an organization and if an organization fail to look after such compliances, then several legal actions and penalties may be imposed on such business or organization and even on concerned professional.

What is Legal Compliance Reporting?

Legal Compliance reporting means the process of presenting information in the form of a reports that depicts that a company is abiding by all the applicable rules and regulations set by the government and other regulatory authorities.

Legal Compliance report includes everything related to compliance from head to toe such as information related to company data, how it is controlled, protected, distributed internally or externally. Compliance is a never-ending journey and various companies use compliance reporting tools that helps companies in generating required reporting to meet the requirements of compliance.

Reporting of Legal Compliance is the most important duties of a Compliance officer and such report which is prepared by the Compliance officer shall be submitted to the Board of Directors, Senior Management, Regulatory bodies, others, etc.

What are the Key features of Legal Compliance Reporting System?

There are several features of Legal Compliance reporting system such as:

• Various laws that are applicable to the Company at different levels shall be divided among various departments with respect to their functions.
• The head of the concerned department have the responsibility for all the legal compliances and for that, various officers shall be designated to undertake the same in this regard.
• The Legal and Secretarial Department and Company Secretary shall act as a Counsellor who provides guidance and advice to the designated officers of the concerned departments.
• The Compliance Report shall be submitted by the officers to the concerned head of their department and such head shall sign the same and submit such report to the Managing Director or CEO of the company. The Managing Director or CEO shall submit such report to the Board of Directors at the Board Meetings.
• If a show cause notice has been issued to the company for any non-compliance of any rules, regulations, standards then such notice shall be forwarded to the compliance officer or Company Secretary on immediate basis.

What is the significance of Legal Compliance Reporting?

Legal Compliance is important for following reasons:

• It is the duty of an organization towards its stakeholders or community– It is the duty of an organization to comply with the law and an organization uses the resources of investors, creditors, etc. to pursue its business then it becomes the primary duty of an organization to repay the same by complying with applicable rules and regulation.
• It helps in building and maintaining trust with others– It is very important for an organization to adopt rules and norms throughout the organization which really helps in building and maintaining trust with others.
• Lack of compliance leads to damage of reputation– An organization with strong compliance function makes an organization trustworthy on which costumers can easily rely on them and it also helps in maintaining good reputation in the market if compliances are up to mark.
• Compliances are the drivers of change and innovation– Compliances can be a tool of change and it also focuses on driving innovation for an organization.
• Compliances leads to consistency– Without complying with rules and regulations in a proper way, the decision are not considered as appropriate and treated as made in a vacuum. Hence, compliances lead to consistency.

What are the steps for evaluating Legal Compliance?

The following steps are involved in evaluating Legal Compliance such as:

• Keep track on changing laws and regulation– Compliance is a continuous process for tracking changing laws and regulations. Organization must identify the areas in which rules and regulations are applicable and it leads to implementing policy change and hence, monitoring such change on a regular interval. It is the responsibility of an organization to prepare for upcoming changes.
• Clarify the reporting duties– Reporting requirements differ depending on the sector in which business operates and such requirements shall be fulfilled by assigning duties to the concerned persons. Reporting deadlines shall be maintained by the concerned persons so that none are missed.
• Adherence of policies– All the policies are need to be checked on timely basis to ensure that such policies are still fit for the purpose and policies are updated one. An important element that needs to be considered here is that employees are aware of these policies and they are working according to it.
• Involve specialists– To prevent break laws, an organization should hire some specialist to ensure that organization operates in a transparent manner and everything is in order and such specialist can also provide advice when needed by employees and owners.
• Internal Audits– Scheduling Internal Audits at a regular interval serve as a great tool to discover any non-compliance at an earlier stage only. Internal audits focus on each and every aspect of an organization.
• Choose right software– Choosing of right Compliance software is always essential for an organization to comply with the rules and laws and reduce the risk of human errors also. The job of compliance becomes much more complex without a good compliance software.

Wrapping up

Adhering to rules and regulations not only reduces risks of non-compliance of applicable laws but it also helps in avoiding huge penalties and fines on the company or persons involved with such company and such amount can be utilized in many activities such as research, education programs, training of employees, etc. It is a kind of mandatory measure that an organization have to adhere to in a strict sense. The structure of compliance is a flexible one and can be change according to the requirement.