What Is a Compliance Audit Software?
Not only large companies but also smaller and medium-sized companies have to comply with a large number of laws, regulations, and rules at a local, national, and international level. The ultimate goal of every SME should be to comply with precisely these. Rule-compliant behavior is an important pillar for smooth business.
Compliance means that your company adheres to all laws, regulations, and self-imposed rules to avoid legal violations, liability claims, and image damage. Therefore, it affects all areas of the company.
The Compliance Management System (CMS) includes all processes, structures, and measures that your company sets up to comply with the law and the rules. In order to comply with all these regulations and avoid any financial penalties, companies are investing in compliance software to monitor their daily operations.
Companies in the finance and insurance industries must establish a compliance management system. Listed companies are only legally non-binding recommended to set up a corresponding system so far. However, any company that wants to be on the safe side of compliance can consider implementing compliance audit software.
Compliance audit software is used to continuously track, monitor, and audit business processes to comply with applicable regulatory, industry, and security requirements, corporate policies, and consumer standards.
The digital platform covers many business processes and regulatory requirements, including industry-specific regulations and standards such as OSHA, ISO, and Sarbanes-Oxley, corporate ethics, acceptable use, and business partner policies.
Why Do You Need a Compliance Management System?
Every company that wants to be on the safe side of compliance should think about setting up a CMS. In April 2021, a new set of global standards for compliance management systems, the ISO 37301, was published by the International Organization for Standardization (ISO)
ISO 37301 provides the framework for how a CMS must be structured to meet international legal standards and regulations. It also takes into account social and ethical values.
The ISO 37301 standard replaced ISO 19600, which only provided recommendations for a content management system. The new standard is a certification standard, which means that any accredited auditor can certify a CMS to ISO 37301.
Using a certified content management system offers your company the following benefits:
- Ensures business success
An effective CMS enables the monitoring and management of compliance risks and allows the company to run a successful and sustainable business. - Minimizes liability risks
A CMS protects companies and employees against the risk of personal liability in civil and criminal law. If a violation can be linked to the company, it is easy to accuse of an organizational fault since no error would have occurred with proper management. A content management system can avert such drastic legal consequences. - Creates trust with business partners and customers
Companies that act lawfully are considered worthy of belief, which in turn creates trust. Other companies and customers want to have relationships with companies that comply with laws and regulations and do not attract negative attention - Affects positively on the award of contracts
Increasingly, when awarding contracts or listing approved suppliers, attention is paid to a functioning compliance management system. Compliance declarations are often required from customers, contractors, and suppliers. Those who are still unable to produce these have bad cards in the competition. - Reduces borrowing costs
Many insurers reduce the premiums of insurance policies that cover liability risks in the event of damage for which the company is responsible if a compliance management system is in place. - Optimizes resources in the company
With a CMS, compliance activities in the company can be bundled. As a result, resources are used more efficiently, leading to improved internal organizational structures and quality standards. - Sensitizes the workforce
A functioning compliance management system also sensitizes employees to comply with laws, regulations and internal rules. - Creates reputation gain
A legally compliant company can also present itself to the public as such. Through a functioning compliance management system, a «trade mark» can develop into a «trust mark». - Facilitates the overview
A CMS should be dynamic to adapt to the needs of the business. Thus, the management is informed on time and directly about relevant changes and keeps track of all the difficulties. So they can minimize risks and protect investments.
Which Elements Belong in a Compliance Management System?
Companies and institutions should adhere to general standards and guidelines simply for the purpose of certifying their CMS to ISO 37301. Some guidance for successful compliance is offered here by public institutions, such as the recommendations of the U.S. Department of Justice (DOJ) and the explanations in the U.S. Foreign Corrupt Practices Act or the principles of the UK Bribery Act.
Accordingly, the following elements should not be missing from any compliance management system:
- Compliance Risk Analysis
The risk analysis is the first step before a CMS is developed and implied for an organization. It is the starting point for any compliance program. With its help, risks are recorded and analyzed in order to create a compliance program based on these results, which is exactly tailored to the company. Such a compliance risk analysis can be repeated at regular intervals in order to uncover new risks and adjust the CMS accordingly. - Compliance Program
The compliance program addresses all the tools and processes the company uses to ensure that it adheres to rules and laws. It takes into account external requirements as well as internal standards and directives. Processes are also defined in the compliance program for dealing with violations both internally and externally. For the development of a compliance program, however, certain foundations must first be created: - Lived compliance culture and communication in the company: Integrity should not just be empty words written in a program, but an integral part of the company culture. From the executive to the specialist, all employees should understand why the compliance program is important for the company.
- Compliance guidelines for behavior in the workplace: Internal guidelines provide employees with a guide for behavior in the workplace. This also makes it transparent for employees what voluntary commitments the company has imposed on itself. Policies can vary by industry, but the most important include the code of conduct, privacy policy, workplace health and safety requirements, the regulation of working hours, absences, and vacations, equal opportunities policies, and the use of social media.
- Compliance Goals: Compliance goals should clearly reflect the purpose of the compliance program. This contributes to an open and transparent internal communication and compliance culture. At the same time, in the event of a breach, it helps the criminal authorities to check whether the compliance program is sufficient and fulfills its purpose.
- Compliance organization: The main responsibility for compliance lies with the management. However, every company should install a compliance department with a responsible compliance officer. This should be provided with the necessary resources to take care of and monitor compliance in the company.
- Compliance business partners: Compliance and liability risks could also arise for companies through business partners. Therefore, a risk analysis for business relationships must also have been carried out and, based on the results, guidelines for cooperation must be defined.
- Compliance monitoring and improvement: To ensure the success of the compliance program, it must be regularly reviewed and improved. New national and international guidelines or internal requirements necessitate additional review processes. Therefore, the system should be regularly reviewed for weaknesses or overlooked risks.
How Does Compliance Audit Software help?
A digital platform helps compliance staff to create reports and lists without much effort. With its help and the software, they can regularly review compliance work, conduct risk analysis, and update and improve the program.
A compliance management system software also ensures complete and audit-proof documentation of all information, guidelines and documents. This keeps a company’s compliance work transparent and traceable. This protects against claims for recourse and helps in the event of audits by authorities.
The use of a compliance management system software also facilitates the following additional tasks:
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Fulfilling compliance tasks
With an automated workflow for completing compliance tasks, actions are assigned more quickly to the appropriate employees – even during an ongoing audit. The action can be assigned a priority level and a due date. The affected employee is notified in real-time via email. This allows him*her to respond to the situation immediately. Compliance officers are notified immediately when the action is completed.
Reporting compliance issues
With compliance audit software, anyone can use their smartphone or tablet to conduct on-site inspections and report issues. With this feature, compliance officers can encourage other employees to become more involved in the company’s compliance program and report compliance issues while they are still traceable.
Developing decision-making processes
More comprehensive reporting means that a large amount of data is generated. Digital compliance management software helps organize large amounts of data and evaluate it through the analytics dashboard. It makes it easy to identify gaps in the compliance program and create plans to fill those gaps. Organizations can use this improved data quality to make more strategic decisions that improve the compliance program in the long run.