TOPIC: PLAN AND ESTABLISH COMPLIANCE MANAGEMENT SYSTEMS
DATE: 18-08-2020
1 Scenario
An external consultant’s job is to collect information and propose a compliance management system for the organization. Charity-Care is a public company that works under Corporations Act 2001. A compliance management system needs to be planned for Charity-Care while addressing internal and external factors and considering the problem-solving technique.
2 Roleplay
External consultant: Hello, Hope you are doing well!
CEO: Hello. I am doing great. How have you been?
External consultant: Great. As per your email, I need some information about the company.
CEO: Sure. Please go ahead.
External consultant: Do you have compliance systems in your organization, and if not, we would like to know do you manage the organization and cash handling process?
CEO: Our organization has proliferated, and we would like to focus on now establish a compliance management system to work with the issues that we found in the organization regarding audit and stakeholders’ interest in managing the cash handling process. We need transactions to be recorded and ensure that we provide the best possible outcomes for our clients. Our business manager does not very well handle the issues of control and compliance.
External consultant: Ok. It seems that you need the compliance management system for controlling the process and recording transactions. Which policies are currently documented in your organization?
CEO: Currently, we have documented risk management policy, sexual harassment, credit card, financial handling, expense reimbursement, expenses, work health and safety, and equal employment opportunity policy. We still have not worked on training and motivational issues in implementing the strategies. We would like you to achieve computerized financial management and payroll system.
External consultant: Ok. We will do that. What is the budget that you have decided on the compliance management system?
CEO: There is no specific budget that we had addressed in the past, but we certainly need to cover the compliance management system within AUD 5000.
External consultant: Ok, we will make sure that compliance management is addressed in the budget. If there are any variations in the budget, we will let you know for the smooth operations of the business.
CEO: Ok. Any other information you require for the compliance management system? What are organizational requirements for the compliance management system, and what will be the criteria for establishing a compliance management system?
External consultant: For establishing a compliance management system, we would like to make a research plan and outline basic requirements for the compliance system. We will require certain information, and we will provide a primary method for establishing compliance systems. Therefore a research plan will be outlined, which will explain how and what will be covered in the compliance system.
CEO: Ok. I will wait for the research plan and ensure further process.
External consultant: Ok. I will get back to you after preparing a research plan and collecting organizational data on compliance performance.
3 Research plan
Research tasks
Research tasks that need to be undertaken focus on collecting information regarding qualitative and quantitative data and working towards organizational compliance performance to gain results. Firstly all the relevant data to be included in the compliance system will be collected while working towards the compliance system.
Proposed research methods
The observation research method is used to collect and analyze the data that includes compliance culture, performance, and statistics. Survey tools are used to gather information while indulging in scenarios and policy frameworks. The company turns over $1,700,000 per annum. From which $1,400,000 is earned from retail business and $300,000 for repair charges. The net profit of the company is $150,000 per annum. From the audit report, 40% of the computer spare parts are purchased from Compute IT that is owned by the manager’s family. A cheque was paid to Cheap Computers, which has no evidence that the goods were received. From a visit to the warehouse, there were important details covered, such as Not all customers wanted a receipt. However, they just wanted to pay the money and go. The movements were not recorded while the cash handling process was not valid. The retail store uncovered several items. Stocktakes are done late Friday. Instead, it should be done on Saturday afternoon when the store is shut. The retail manager thinks there is no need to have a contingency plan for disaster or any other accident. Visiting counseling centers, there were inquiries about seeking counseling and keeping the password login in the computers. The confidential information was not meant, and the receptionist showed the overall knowledge of clients.
4 Survey tools
A sample questionnaire will help to capture organizational data. The questions include
Does the employee follow the policies and procedures?
What are the issues that the employees face in terms of auditing?
Are employees satisfied with the work health policy?
How is the cash handling process considered?
Is the employee retention rate low in the company?
Does the company motivate and solve employee issues?
Data collection surveys are used to collect data and identify significant insights into the company while indulging in ineffective analysis and examining the best option for the compliance management system. To administer the survey, it is essential to use the survey tool and work on population groups to permit and obtain the sample while work on demographic information to analyze the results. The survey items may not necessarily be in numerical rating; it can even consist of open-ended questions. Interviews can be conducted to gain data and examine the level of policies addressed in the company.
5 Organizational data on compliance performance
External consultant: Hello! Are you working on the compliance system currently?
CEO: No, we do not have a compliance system, but we have policies and procedures that we address in the business while taking care of essential elements and standards.
External consultant: Ok. So we have gathered the data as per your information, which seems that we will provide the best compliance system which will satisfy your compliance requirement plan.
CEO: Ok. A computerized compliance management system is required for the staff, which will help make an automated payroll system and indulge in a simple method for the company.
External consultant: Ok. We will make sure about computerized financial management and payroll system for the staff.
6 Identification of compliance requirements
Internal compliance requirement
As per the organizational policy and procedure document, the domestic compliance requirement consists of training and motivational issues to be considered appropriately. The policies that are currently addressed by the company are risk management, credit card, sexual harassment, expense, financial handling, equal employment, expenses, and work health safety policy. The audit report has uncovered issues in the audit, but now the new audit report will be considered while working on the audit policy. Significant transactions need to be recorded as per the audit policy, and the warehouse manager should consider providing a receipt to customers and suppliers.
Retail stores should be handled effectively, which will be covered in the compliance system. Counseling centers will provide all the necessary inquiries but should address the confidentiality of clients and engage in an effective communication process. At the head office, all the required business managers’ concerns should be solved, which include providing financial reports from satellite operations. The work responsibilities will be divided among team members to address the issues in the future.
External compliance requirements
The external compliance requirements include ASIC requirements, Income Tax Act, GST Act, and BAS regulations and Privacy laws. These are addressed as per the state/territory regulatory bodies that will ensure standards for compliance and ensure risk management.
Industry-specific compliance requirements
Collection Act is addressed in terms of industry-specific compliance requirements. However, this is a significant aspect that tends to work towards maintaining industry compliance requirements.
7 Compliance requirements
Areas of organization
Tax
Work Health and Safety
Asset management security
Confidentiality of funds
Misappropriation of funds
Fraud
These are specific areas of the organization to be covered in the compliance requirement. Risk minimization can be considered with internal controls and budgeting.
Organizational compliance data
Organizational compliance data include financial fraud, customer complaints, training numbers, and accident figures. These need to be addressed in the regulatory compliance system.
Risks
The risk involved in non-compliance includes legal cases, penalties, and loss of assets that need to be covered in the compliance management system.
Penalties
At the time of breaching compliance, the sanctions to be addressed as tax law and GST law.
Ways of ensuring ongoing compliance
There are ways of ensuring continuous compliance such as risk management, guidelines for compliance handling, records management, and schedule for tax lodgment. These are specific options to consider continuous compliance and ensure important requirements in the compliance system.
8 Establish criteria for compliance management system
Available options for compliance management system
Risk management, guidelines for complaint handling, and records management are the best options that can be considered as identified compliance requirements.
Suitable system components
The appropriate system components that should be included are asset management, legislative compliance, ethics, the duty of care, and recordkeeping that ensures the confidentiality of records in the company.
B Comparison of identified compliance management options
The compliance management options are determined based on the cost, effectiveness, feasibility, efficiency, and match to the organizational culture.
C Recommendation
Recordkeeping is the system that needs to be considered as a suitable option for the Charity-Care company.
9 Summary report
Compliance requirements
Internal compliance requirements, including information management and recordkeeping requirements
Risk management policy
Sexual harassment policy
Credit card policy
Expense policy
Financial handling policy
Work health and safety policy
External compliance requirements
ASIC requirements
Income Tax Act
GST Act and BAS regulations
Privacy laws
Industry compliance requirements
Collections Act
B Compliance effects
Areas affected: tax, financial reporting, WHS, asset management and security, the confidentiality of records, and fraud.
Risks: legal cases, loss of assets and penalties
Penalties- Tax laws and GST laws
Risk minimization- internal controls and budgeting
C Compliance systems
Available systems- risk management, records management and guidelines for complaints handling
Compare policies in terms of
Cost- The risk management system is cost-effective in addressing risk and working on risk challenges in the business.
Effectiveness- The risk management system is useful in terms of implementing compliance systems.
Efficiency- Efficiency in results will be addressed while implementing a compliance system.
Feasibility- Risk management is feasible and can be changed as per the business niche.
Match to organizational culture- risk management system will ensure corporate culture.
Recommend system- Record keeping system
10 Reflection on the process and report
I have learned to prepare a research plan and written report, which helped me gain knowledge about the types of research methods and tools used in the business. The overall experience that I learned was studying the case study and establishing a compliance management system.
Type of research undertaken- Observation and survey research was conducted in the process, which I feel helped me to consider useful business challenges while implementing a risk management system.
Development of the research plan- Research plan helped me to gain knowledge about research methods and tools to be used in establishing a compliance management system.
Development of survey tool- survey tool used was a questionnaire tool to which I provided detailed questions for the interview and survey process.
Analysis of qualitative and quantitative data- I learned different techniques to be considered via qualitative and quantitative analysis of data, which helped me gain knowledge about research analysis.
11 Submission of documents
All the relevant documents are submitted, including a written report, a research plan, and a written reflection.