Step-by-step Guide on the Successful Implementation of a Robust Compliance Based Ethics Program

To gain long-term prosperity, maintain and protect values, and the ethical health of an organization, a practical implementation of a Compliance Program that helps build a powerful governance practice is quite pivotal and challenging at the same time. Where umpteen cases are being reported of an ethical and compliance failure in the year recently passed, the need for an effective Compliance Based Ethics Program has become the necessity and the foundation of Sustainability for the entire organization opportunity to bring operational effectiveness. The article focuses on implementing a Compliance Based Ethics Program and its related audit key considerations.

Compliance Based Ethics Program – The Pressing Priority

The year that just passed has seen unprecedented global pandemic effects that resulted in an economic breakdown worldwide. When this was happening, more companies filed bankruptcy, a more significant number of organizations failed to report compliance and ethics violations, and more cases of business closure also took place. Although The Government imposed inspection penalties on some organizations, the other represented a sharp increase in criminal suits. An effective risk management program is complete in itself when monitoring compliance with the regulatory requirements that promote ethics is implemented. Regulators and lawmakers are considering creating globally accepted provisions and regulations to be in place and imposition of penalties to be pretty decided by stretching their reach outside of their jurisdictions.

Practical Implementation of a Compliance Based Ethics Program not only helps in the achievement of long-term organizational goals but also enables robust Sustainability Reporting. The Indian economy has witnessed a surprising spurt in the past decade, and it has become a necessity to protect the environment, economy and establish smooth governance across the organizations. The media’s global presence is so quick that customers are well-aware of various business practices and policies. To maintain a positive image, creating a compliance-based ethical culture is trending in demand more than in the past.

Essentials of a Complete Compliance Based Ethics Program

Setting objectives while building and creating an ethical culture that ensures compliance is considered the best practice. Once the goals are set, the Implementation and post-implementation follow-up becomes easy. Every organization should set three main objectives: Easy Application, Precise Documentation, and Accurate Implementation Results.

Easy application ensures whether the Compliance Based Ethics Program is too complex to follow for employees and suppliers and everyone dealing with the entity’s business. The application objective should also provide a fair assurance to comply with the organization’s laws and regulations and set policies.

Precise documentation considers if the set policies and procedures are written down on paper or just the mouth’s words. A well-documented program should also include various resources to enable successful application, the management’s roles and responsibilities, penalties for non-compliance, incentivization for extraordinary performance (if the administration wants) as a minimum.

Accurate implementation should ensure that the set program is in place at any cost and is being followed by everyone connected to its business. It should also clearly determine whether performance reporting is in place to present its accuracy.

How to Effectively Implement a Compliance Based Ethics Program?

Knowing what an organization wants to achieve and setting objectives makes implementation easier. The below steps are explanatory only, and they will change from organization to organization as every business has its own set of goals and objectives.

♦ 1 Documenting the Organization’s Values

It is imperative to note down the organization’s values and make sure it is in practice daily. From top management to workers, everyone in the organization should be aware of its company’s values and be conscious of its application. Developing an ethical culture that complies with organizational values is the fundamental aspect of the Compliance Based Ethical Program. Hence, it should be established as part of the Code of Ethics and Code of Conduct that describes high-level guidelines relating to ethics and compliance risks. This includes regularly updating the compliance requirements by the Government, Tax Authorities, and any other regulatory body.

♦ 2 Assessing Risk Areas

Understanding the risks related to the Implementation of Ethics and Compliance based culture is a bit challenging part of the process. However, if understood and defined clearly, it makes the implementation successful and makes the internal audit easy. It should be assessed whether the organization has considered the risks relating to its business and whether it complies with the laws and regulations applicable to its organization’s business. Prioritizing legal and regulatory threats addresses the critical issues remaining in the program’s effectiveness.

♦ 3 Specific Policies and Procedures

The Compliance Based Ethics Program should include exceptional cases in its policies and procedures that address an organization’s specific circumstances. For example, if an organization is in the real estate business, policies and procedures should include exceptional risk cases of such trade and ensure the employees know it. The organization should also conduct employees’ training to explain and maintain an ethical culture that complies with every applicable law.

♦ 4 Getting Regular Feedback

An implemented policy that enables employees, customers, suppliers, and others related to the organization’s business to ask queries and report any non-compliance is vital for successfully implementing a Compliance Based Ethics Program. The program should also ensure that only receiving feedback is not the solution, but necessary action should be taken when any non-compliance is reported. Organizations may use various communication methods to remind everyone about company ethics and requisite compliance procedures to make it worthwhile. Organizations should also educate management enough regarding the new legislation and its interpretations.

♦ 5 Evaluation and Action

A continuous evaluation of every step discussed above can make the implementation practical and sustainable. It should be part of the scope of the internal and external audits to complete its execution effectively. The tone at the top plays a dominant role in taking any action against non-compliance or mitigating the auditors’ risk areas. The constant evaluation of the program’s efficiency and efficacy and recommendations on dealing with them effectively- plays an essential role in creating a powerful program. Being vigilant and mindful is the key to building an effective Compliance Based Ethics Program.

The Bottom Line

No short-cut formula leads to the successful implementation of a Compliance Based Ethics Program. It becomes successful through human efforts and the willingness to make it a powerful and impactful program.

Author Bio

Qualification: CA in Job / Business
Company: Wint Wealth
Location: Ahmedabad, Gujarat, India
Member Since: 28 Jan 2021 | Total Posts: 6
Writing everything about Finance, Business, Investment, and many other genres. As a professional Chartered Accountant with over 10 years of experience, I can help you develop well-researched, informative, and detail-oriented articles as well as blogs. I have written articles/blogs for CRED, Gr View Full Profile

My Published Posts

More Under CA, CS, CMA


  1. Paritosh Segal says:

    Very nice and useful. We are a not for profit section 8 company. We want to implement best practices and a high level of transparency, governance and compliance in our organization.
    Thank you for your article.

    Paritosh Segal, Co-founder NavSahyog Foundation

    1. RUDRI MEHTA says:

      Thank you Sir. Great initiative and I wish you all success to implementing the transparent governance at your organisation.

Leave a Comment

Your email address will not be published. Required fields are marked *

Search Posts by Date

June 2021