13 Tough Corporate Compliance Questions Companies Always Regret Avoiding

Two focuses of my blog are Financial Literacy/Money and Business/Entrepreneurship. When you’re running a business of any sort, compliance is a major component. In general it’s best to get the details hashed out sooner than later. The following contributed post is entitled, 13 Tough Corporate Compliance Questions Companies Always Regret Avoiding.

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Today’s companies face more scrutiny than in the past. Regulators are increasing their vigilance, and even the public is getting onboard.

Twenty years ago, compliance was a pretty dull subject. Companies did it because governments forced them to. But today, it is becoming much more interesting. That’s not because the nature of compliance has changed (it’s the same as it ever was). Instead, it is because the consequences of getting it right (or wrong) are now so much more important.

Generally speaking, when companies talk about compliance, they are referring to two different things:

1. Compliance as an action

2. Compliance as a standard

Compliance as an action means that the business is adhering to government laws, health and safety standards, and data and security requirements. The word “action” is a conscious recognition on the part of the company that it must follow certain rules and policies.

In practice, this type of regulatory compliance means that the firm follows the mandates of recognized third-party standards-setting bodies. The goal is to enable the company to run safely and legally, meeting the current standards to a high degree.

The other type of compliance is “compliance as a standard.” Here, companies apply their own rules and standards in their firms to maintain the stability of their companies. These standards are recognized and enforced within the organization, but there are no external penalties if the enterprise does not meet its own minimum standards.

In both cases, of course, being compliant puts the company at an advantage. Firms that follow rules consistently are much more likely to have a trusting customer base, make more money, and generally do better than their rivals in the marketplace.

In this post, we take a look at some tough compliance questions that all companies should be asking themselves. Check them out below:

Do I Have The Required Business Licenses And Permits I Need For My Business?

Starting off, the first question to ask is whether you have the right business licenses and permits for your business. Every state, city, and country is different.

Some jurisdictions do not require licenses or permits for specific types of businesses. However, others insist on it and will impose hefty fines if you break the rules, potentially preventing you from getting off the ground at all.

How Should My Organization Navigate Ever-Changing ESG Requirements?

ESG requirements change frequently. Every year or so, regulations evolve, and standards imposed by consumers also adjust.

Companies, therefore, need to be able to track ESG compliance across multiple dimensions. They need to regularly compare themselves to other industries, their peers, and across time. As standards change, so too will the practical necessities of ESG. Companies that don’t keep up may appear dated and could be falling foul of the law.

Does My Company Need A Fictitious Name?

Companies may need a fictitious name. If you have already incorporated your business name and are using the same name for trading, then you don’t require a DBA, also called a “fictitious name” registration. However, if you do plan on trading under some other moniker, then you will need to add a fictitious name to remain compliant.

Unlike other business names, fictitious names don’t have trademark protection. Therefore, if you want to protect your names from the competition, you will need to register them with the federal government.

Will I Be Operating In A Different State

Corporations operating in different states, or multiple states, will need to apply for permission from the relevant authorities to operate. They will also need to brush up on labor and trading rules for each state, as they may differ significantly.

The same applies if you are planning on trading internationally. Rules in foreign countries may be dramatically different from back home, potentially putting you at an advantage, or disadvantage, depending on your operating model.

Should I Update My Company Information?

If you change any aspect of your company, you will need to notify the state. In some jurisdictions, the number of changes that qualify for notification can be quite high and may include:

● Your business address
● Changes to board members
● Company name or trading name
● Company structure

If you are not sure which changes require notification, contact your local authority and ask for more details. You may be able to get in touch with a help desk that can provide you with further clarification.

Am I Adhering To Industry Standards?

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Compliance varies dramatically by industry, and, sometimes, between companies in specific sectors. For instance, medical compliance tends to be more involved than other sectors. Clinics and practitioners have to correctly manage documents, remain HIPAA compliant, and follow rules that aren’t imposed on other industries.

In fact, it can be so challenging that firms, such as Compliance Revenue Consulting, report that a lot of participants in the sector seek external advice. Training, boot camps, webinars, and lectures often run alongside conventional medical operations.

Working out whether you are adhering to industry standards, therefore, isn’t easy. The majority of firms get external support, particularly if they operate in industries with substantial red tape. If you aren’t working with an experienced partner and you don’t have your own internal team, you may be putting yourself at a disadvantage.

Is My Company’s Environmental, Social, And Governance Policy Suitable For The Challenges Of Tomorrow?

Many companies have ESG policies that work in today’s business climate, but most are failing when it comes to addressing the challenges they will likely face tomorrow. ESG is unlikely to remain static for long, and will almost certainly change dramatically until 2030 and beyond. However, many firms are not ready for the coming changes and might not be able to keep up.

The solution is to develop a plan that will allow your firm to remain compliant. This gives you peace of mind while also ensuring that you meet all the relevant requirements. Business leaders must consider the likely ramifications of failing to keep pace with changes consumers expect. Not keeping up could put your brand at a significant disadvantage versus the competition.

Have I Filed Annual Reports And Statements For My Company?

Governments require that companies file annual reports (and sometimes quarterly reports) so that they can keep track of their accounts for tax purposes. However, many companies, particularly small businesses, fail to comply, often missing reporting deadlines by several months.

The good news is that you can easily remedy this problem by working with a certified, trained accountant. You can either forward them your account information or give them direct access, allowing them to go through your accounts and then use the information they gather to file your returns for you, on time, without you having to do any extra work.

Of course, if you have a bigger budget, you can simply hire a trained accountant in-house.

Does My Company Have A Culture Of Compliance

Perhaps the most important question you can ask about compliance is whether your company has a culture of it, or whether people like to take liberties. Companies with poor compliance cultures ultimately wind up falling foul of the law and losing their reputation among customers.

If your compliance culture isn’t as good as you would like it to be, begin steps immediately to turn the situation around. Compliance is more than ticking boxes: it’s a way that organizations think, behave and make decisions. It’s something that can permeate companies of any size, not just Fortune 500 brands.

The nature of compliance is also changing. In the past, it was a strictly technical field. However, now it is expanding into many other areas, including how people address each other.

Do Monitoring Processes Keep Directors Informed?

If directors are to make changes in the organizations they run, they require adequate monitoring processes to keep them informed. Unfortunately, such systems are rarely in place in many organizations, making it hard for leaders to keep track of what’s happening on the ground.

Take a candid look at your organization and ask whether you have systems in place that let you accurately monitor the performance and behavior of your team. If you don’t, then ask what you should do to correct the situation.

Have You Ever Conducted An Internal Audit?

Many companies wait for external audits to reveal they have problems, and by that time, it’s too late. Fines can be large, and in some instances, companies get shut down.

The key to preventing this is to conduct realistic internal audits first. This way, you can determine exactly where you are going wrong and what you need to do about it.

Does Management Take Reports Seriously

Another question to ask is whether management takes reports of problems within the company seriously. Is senior leadership committed to improving standards in the organization? Or is it in their interest to continue with the status quo?

Are Processes In Place To Allow Employees To Raise Any Concerns Or Issues They Might Have?

Lastly, organizations need robust processes in place to allow employees and other stakeholders with concerns to come forward and report issues.

Author: anwaryusef

Anwar Y. Dunbar is a Regulatory Scientist. Being a naturally curious person, he is also a student of all things. He earned his Ph.D. in Pharmacology from the University of Michigan and his Bachelor’s Degree in General Biology from Johnson C. Smith University (JCSU). Prior to starting the Big Words Blog Site, Anwar published and contributed to numerous research articles in competitive scientific journals reporting on his research from graduate school and postdoctoral years. After falling in love with writing, he contributed to the now defunct Examiner.com, and the Edvocate where he regularly wrote about: Education-related stories/topics, Science, Technology, Engineering and Mathematics (STEM), Financial Literacy; as well as conducted interviews with notable individuals such as actor and author Hill Harper. Having many influences, one of his most notable heroes is author, intellectual and speaker, Malcolm Gladwell, author of books including Outliers and David and Goliath. Anwar has his hands in many, many activities. In addition to writing, Anwar actively mentors youth, works to spread awareness of STEM careers, serves on the Board of Directors of the Friends of the David M. Brown Arlington Planetarium, serves as Treasurer for the JCSU Washington, DC Alumni Chapter, and is active in the Dave Ramsey Financial Peace Ministry at the Alfred Street Baptist Church. He also tutors in the subjects of biology, chemistry and physics. Along with his multi-talented older brother Amahl Dunbar (designer of the Big Words logos, inventor and a plethora of other things), Anwar is a “Fanboy” and really enjoys Science-Fiction and Superhero movies including but not restricted to Captain America Civil War, Batman vs. Superman: Dawn of Justice, and Prometheus. He is a proud native of Buffalo, NY.