Businesses face numerous issues every day and every year related to compliance that may impact their businesses severely. The cause of these issues is very stressful, especially for small businesses.
In today’s world of cut-throat business competition, every business gives foremost importance to compliance solutions.To be frank enough, in today’s ever-changing landscape of HR laws and regulations, certain parameters such as labour law compliance and statutory compliance management are of immense importance to the businesses as failure to comply with the same can have serious repercussions. Let us have a look at some of the major challenges faced by the company while handling a compliance system.
Availability of expertise
Many of the businesses which operate in multiple states are required to comply with central, state and local government regulations. Management of all the applicable compliances needs deep functional expertise. Organizations many time lack the required expertise to manage all the required compliance solutions.
List of applicable acts and compliances
The number of acts and applicable compliances for an organization in India ranges from a few hundred to a few thousand. Compliance officers do not always possess a list of applicable compliances for their businesses. Businesses also have a dynamic nature. They form JVs, SPVs and grows via merger and acquisitions. The list of statutory compliance management needs refreshes from time to time for a particular business.
Ever-Increasing Penalties
Companies Act 2013, was introduced to bring in sweeping reforms. The act laid down provisions for criminal proceedings and even jail term for non-compliance. There have been instances of loss of clients, board reprimand, severe financial penalties, lockdown and business closure and freezing of business accounts due to non-compliance. The companies should be ready with comprehensive compliance solutions to avoid punishment and penalties.
Very Fluid Regulatory Environment
The regulatory environment of India is actually quite dynamic. There are multiple websites of Central. State and local governments publish notifications, circulars, and gazettes on any given day. These often result in numerous changes due to various requirements such as forms, dates, calculations, and procedures among others which ultimately leads to critical changes to compliance obligations. In Fact, there should be proactive and automatic notifications from the government so that the company can quickly assess the impact of changes and make the relevant corrections.
Manually Intensive Compliance Program
It has come to light that many a time the compliance officers in India lack the digital knowledge and manage their compliance obligations in a highly manually intensive atmosphere. This kind of ad-hoc people dependent and paper-based compliance management environment is out of fashion these days. These processes depend on tools such as emails, phone, and spreadsheets to check their compliance status. They lack reporting capabilities and they spend days to identify missed compliances. When served with litigation or notice they scramble for copies of historical documents, files, challans, etc. Actually, it leads to highly stressed operations on a day to day basis.
Adherence to basic laws of compliance such as labour law compliance is very necessary for the smooth functioning of the company. Also, compliance officers should be well equipped and educated to effectively handle compliance laws and regulations concerning a particular business. It should always be remembered that a compliance program goes a long way in building trust and assurance with the board, shareholders, and employees.
