The Role of Boards in Ethics & Compliance

Oct 7, 2022


The judgments, selections, and actions that ‘reflect and enact our values’ are considered as ethics. ‘Complying or adjusting one’s activities to another’s objectives, to a regulation, or to a necessity’ is considered as compliance. The core of a robust corporation is a strong ethical culture and solid compliance systems. Administrative shortcomings are a recurring factor frequently mentioned in governance failures. The Board of Directors can lead  an enterprise in maintaining a compliance culture in such situations. Compliance is not only mandatory for a corporation, but it mainly contributes to good governance. 

One of the primary duties of the corporate Board of Directors is commonly acknowledged to be establishing and sustaining a corporate compliance programme. However, simply implementing a compliance programme is by no means a sufficient effort. The Board must actively supervise such activities as well. If a company’s business plan contains strategies, procedures, or other components that can be regarded as high risk, then active monitoring is crucial. Such circumstances necessitate the Board’s even greater involvement and active engagement.

The role of Boards in ethics and compliance: 

Since compliance is seen as a continuation of risk management, the audit committee  is in charge of monitoring ethics and compliance procedures. Often, audit committees or other committees that fill this position are in charge of supervising the procedures for monitoring compliance complaints and investor grievances, following latest norms, and providing guidance on any difficulties that arise. Audit committees regularly examine the code of conduct or ethics and collaborate with management to ensure all stakeholders consistently receive, comprehend and abide by such codes. In special situations, specific ethics and compliance supervision might be transferred to other board committees, however the audit committee continues to manage financial-related ethical and compliance issues.

One of the most crucial members of the management team, the Chief Compliance Officer is in charge of supervising compliance and ensuring that laws, regulations, policies, and procedures are followed. The CCO is in charge of establishing standards and putting policies into place to make sure that compliance programmes across the organization are successful and efficient in identifying, preventing, detecting, and correcting noncompliance with applicable laws and regulations. The CCO also serves as the compliance leader and subject matter expert. Senior management and the Board must get reasonable assurance from the CCO that the firm has policies and processes in place that are effective and efficient, well-understood and respected by all stakeholders, and that it is in compliance with all statutory and regulatory obligations.

The primary responsibility of a corporate compliance team is to develop compliance strategies and programmes, as well as to put policies and tools into place to monitor, manage, and address compliance issues at the corporate level. Due to the expanding regulatory compliance duties, the corporate compliance team must also collaborate with different departments and regulatory teams to manage compliance at the departmental level.

A risk-based approach to compliance and ethics management involves identifying the high-risk areas within the organization, prioritizing, managing, and monitoring those risks. Compliance risks can be measured and scored from different perspectives such as business unit, process, and geography. Based on the risk rating, organizations can effectively plan control testing. Issues can be also prioritized based on rating, impact, likelihood, or type.

Importance of Ethics and Compliance in Corporate Culture:

  • Increases Adherence: Even while a course of action or behavior may be legal, it may not always be moral. A culture of ethical compliance must be created and maintained since the two go hand in hand. Your risk is reduced and your compliance is increased the more you express your beliefs and principles, offer training that reflects them, and hold every stakeholder accountable.
  • Productivity: Maintaining ethical standards at work improves business performance, particularly when the code of conduct reflects the ideals of all stakeholders. It also contributes to good governance including ESG goals.
  • Corporate Conduct: Establishing a code of conduct that defines expectations for ethical conduct and fair treatment gives all stakeholders the benchmarks they may use to conduct themselves professionally. This written code frequently goes above and beyond what the law demands and serves as a strong foundation for creating a climate of decency, openness, and accountability.
  • Motivation: All stakeholders  desire a sense of security, confidence, motivation, worth, and respect. All of these components of a prosperous, happy workplace environment are enhanced by fostering an ethical compliance culture, which raises employee morale.

The Dess Advantage:

By using a complete board meetings solution such as Dess Digital Meetings, Board Members and the Company Secretary can seamlessly maintain complex compliances in addition to a complete board portal software experience. The corporate secretary can easily integrate Dess Digital Meetings with their existing board meetings and compliance processes. Dess provides a unified solution for all board & committee meeting requirements.

  • Dess includes a robust agenda management & meetings management module. Meeting administrators and executive assistants can edit board meeting agenda and switch items at the last moment without the hassle of refiling.
  • Dess provides a complete paperless board meetings experience which can be used across various devices such as  smartphones, tablets and laptops. It is also very easy and intuitive to use.
  • Dess comes with a  flexible maker-checker system with  digital signature integration to ensure all meeting agendas and documents can be verified on-the-go
  • With  intuitive Annotation features,  Board of Directors, CXOs, Leadership, Attendees, General Counsel can scribble on meeting documents with confidentiality and privacy. Their “notes” can be saved not only on the document but also as a whiteboard to explain their viewpoints.
  • Be it draft minutes management, note taking, attendance management, circular resolution, board evaluation among other activities, Dess Digital Meetings software is easy to incorporate into existing systems and processes. It has a very short learning curve and feels intuitive to use.
  • For board level collaboration or voting needs, Dess offers various customizable facilities to help board members vote and engage..

No organization can comply with regulations overnight. Compliance is a continuous process that requires enterprises to keep setting new goals. By leveraging technology with advanced and easy to use solutions such as Dess Digital Meetings, corporations can achieve compliance and digital goals, assess the results, and evolve towards improving the results by setting new objectives. Rather than a mandatory task, such continuous enhancement will help corporate compliance become an integral strength of the enterprise.

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