What are the types of internal audits?

Internal audits can include operational audits, compliance audits, financial audits, forensic audits, IT audits, and environmental audits.

What are the key standards in internal audits?

The key standards include independence, objectivity, proficiency, quality assurance, and communication.

What is the risk-based approach in internal audits?

The risk-based approach prioritizes auditing high-risk areas within an organization to focus resources where they are needed most.

What are the 5 C's of internal audit?

The 5 C's are Control, Compliance, Cost, Consistency, and Communication, which are critical for a successful audit process.

How does an internal audit help in risk management?

Internal audits help identify and mitigate risks by ensuring that internal controls are effective and that the company complies with laws and regulations.

Everything You Need To Know About Corporate Compliance

Published on October 29, 2021

Regulatory compliance is becoming a significant issue in both the public and private sectors to ensure operational transparency in business. Entities strive to meet the plethora of regulations and laws by approaching risk management and regulatory compliance advisories. While there has been a lot of debate around whether or not regulatory compliances strengthen a business economy, it would be a lot safer to say that it plays an instrumental role in risk assessment. Before diving more into service and solutions, let us first understand what regulatory compliance is and why it is essential from a business perspective.

Definition

It is a protocol that ensures businesses are following rules and standards that have been set for their industry. Typically, these rules are set by the ruling government and sometimes by the state authorities. Regulatory compliance management means setting the procedures and technology in a place to aid regulatory compliance. A business might own this system, or sometimes a business might outsource the task to help them manage and formulate compliances better.

Compliance requirements in business

For startups and growing businesses, knowing relevant laws and regulations for the industry—they are heading into—becomes paramount to operating a new business legally. Broadly, the compliance regulation is categorized into two types: internal and external. Internal requirements are formed and enforced internally by businesses. These are required by the state government for several business entities. External requirements are formed and enforced by a state or federal authority. Let’s get into details ahead.

Internal requirements for a business: The internal requirements for businesses vary as per their size; it is different for corporations from LLCs. For instance, corporations are required to form strict internal protocols such as making a board of directors, conducting director meetings, providing stock to shareholders, recording every stock transfer. On the other hand, small businesses do not have strict protocols but still need to hold a transparent record of business transactions or any significant business changes. Internal requirements ensure that a corporation is devoid of any loophole and dis-integrity practices.
External requirements for a business: It is sanctioned by the central government and involves the following:
- Annual report: Businesses are required to submit annual or biannual reports to maintain transparency in business. For the same, the businesses may need to pay a fee for report or statement submission.
- Franchise tax: It does not mean, as the name implies; on the contrary, a franchise tax is a levy borne by businesses who want to enter the market in different states. It is paid in addition to the central and state income taxes.
- The code of wages: All businesses are required to stay abide by this code. The wage code amalgamates four labor laws pertaining to minimum wages, payment of wages, applicable deductions, statutory bonuses, and equal remuneration to employees.

The amounting fees for compliance may vary from state to state; therefore businesses should check for the regulation pertaining to the city. The compliance may also differ from business to business based on their size, industry, and several other factors.

Importance of compliance for business

Now we know that business compliance means obeying all mandatory laws and regulations. The process highlights a business’s way of managing its operations and staff and the way it treats its consumers. There are two absolute crucial compliances that any business cannot oversee: HR Compliance and Labor Law Compliance. Failing to meet the prerequisites might damage a business’s reputation or expose them to legal liabilities if they fail to meet the standard code. Let us discuss in detail why these are important:

To prevent falling for criminal charges: Non-adherence to regulations can cause a business to face criminal charges. Therefore it is imperative for entities to ensure that each compliance is met. By doing so, they can avoid the risks of penalties or lawsuits.
To create a healthy reputation: A positive reputation is a hallmark of a successful business. Therefore, entities strive to fulfill all the compliances to prevent any non-compliances related issues or legal problems. Moreover, by strengthening their hold on labor law, businesses take greater social responsibility, resulting in more excellent customer retention.
To improve operation and safety: Safety and security protocols are a great way to create a safer and better work environment. They encourage the workforce to avoid accidents and injury, thus making them more responsible for their job.
To improve public relations: Meeting the list of statutory compliances aids a business in earning a positive reputation among its customers. For instance, HR Compliance allows a firm to keep its employees in their best interest, thus encouraging them to perform better at work, ultimately improving its image in the market.

How Felix Advisory helps businesses with their Compliance Advisory Service?

Our zeal to find the best management consulting services has brought us to Felix Advisory. Its network of advisors engages itself with several market participants to know the game better. It also allows them to come up with practical solutions for complex regulatory issues. It offers a range of compliance services including, routine secretarial services, secretarial audits, certification services, listing compliances, FEMA compliances, employees stock option schemes, setting up foreign entity offices in India, and more. Their regulatory and compliance service package is unique because:

It has an extensive network in several industries.
It brings extensive experience from serving a long time in the domain.
It follows a strict process to ensure compliance with the regulatory rules and laws and adherence to the internal protocols.

Regulators enact rules to address several subjects, and businesses need compliance programs to meet them. The primary compliance risk areas are corruption, reporting, data protection, environment, health & safety, and employment. It would be hard to manage and regulate the operational transparency while mitigating the risk factors if not for the defined rules. To ensure that a business is moving in the right direction and towards growth, it would require to meet all the compliances. Before that, it needs to figure out what compliance is: the sole question that this blog offers an answer to.

Hope this article has helped you know more about Know About Corporate Compliance. Felix Advisory can help you with our Best-in-Class Regulatory and Compliance Advisory.

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