Hr NewsStatutory Compliance

Unintended consequence of non-compliance

Source | LinkedIn : By Shankar TR

In large corporations, especially those with multiple stakeholders, compliance is a key component of management focus. Organizationally, structures are created to manage compliance fulfilment in all functions. Supervision by the Board, CEO & CFO compliance, compliance managers, internal audits & risk assessments, statutory audits, to name a few, are the means by which Compliance is managed. Compliance in these entities is never about just one function, but, illustratively, spans plant operations [boiler, hazardous chemicals, pollution control etc.], HR function [labour laws, industrial establishment related etc.], sales & marketing [trademarks, branch establishment related, exports related], finance & accounts [fiscal laws], projects [permissions], legal function [company assets title etc.].

Contrast this with the small & medium enterprises. They are typically owner managed, constantly strapped for cash with their ‘run before they crawl approach’. In their anxiety to grow and stabilize and sustain, the focus is entirely on the product & the customer. In most cases, they are not even aware of the various compliance requirements. Compound this with the pliability of the professionals rendering assurance services and volcanic activity is already set into motion.

Financial shocks

The ‘discover as you go’ approach often lands them into serious trouble. Years of non-compliance leads to frequent visits by the authorities. These visits, whilst legitimate, are always bandied by the promoters as harassment. These businesses end up paying hefty fines, interest on delayed payments & large demands for past arrears. These can be cash-flow disruptive and a fair number of businesses have had to shut shop due to these shocks.

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