Compliance - The opportunity to make a difference
Corporate Greed and Fraud are somewhat like weather. Everybody talked about it but nobody did anything about it. Then some companies probably went overboard (or atleast did not do it as smartly as some others did) and unwittingly performed a great public service. They brought the corporate greed and swindling center-stage.
If these companies played with Hedge Fund types and took them to the cleaners, probably they would have never made it to the headlines because both parties were playing with full knowledge and consent. But when they destroyed the nest-eggs of thousands of hard-working middle-class employees and share-holders, they crossed a politically sensitive line and faced the consequences.
Sarbanes Oxley is probably the most high-profile legislation passed to control the corporate behavior but there are many others (both old and new) and while many of them (still evolving) do not offer very clear or concrete solutions, they do a great job of bringing compliance into corporate consciousness and hopefully, will evolve into a very meaningful control mechanism over the next decade or so.
The first set of reactions of the corporate world were very predictable - this is not practical, this puts heavy burden on the already stretched corporate staff and profits, why should everybody be punished for a few crooks' behavior, this will kill capital markets and the entrepreneurial spirit, if this goes on, the only way is for companies is to go back to being private and so forth.
A lot of that brouhaha died down but a lot of it did not. The overriding theme started emerging that it was all about INTERNAL CONTROLS and there was not much really that could be said against it. Good companies had them in place much before SOX came in and even a cursory look at the corporate history shows that those who did not have it perished either to internal or external forces.
An extremely healthy debate has ensued over the past 4-5 years about the overall compliance paradigm. What is corporate governance? Ethics are at the root of all responsible behavior but what is an ethic? Ethic seems such a surreal and abstract concept to discuss and apply to the hard, rough-and-tumble world of business. Board members, senior executives and professionals were brought face to face with such issues for the first time (at least on such a large scale) and the first few encounters were ugly and un-nerving, to say the least.
A lot of people (including chairmen and CEOs) were lost (may be conveniently, at times) and wanted someone to take the responsibility of guiding them to compliance. SEC and AICPA and others have risen to the challenge and an increasingly coherent body of knowledge is becoming available to corporations on governance, compliance, risk management, internal controls and best-practices frameworks.
The biggest learning has been that compliance is a state-of-mind and binds all employees and business processes together like nothing else can. While the Chairman and CEO may wrestle with weighty philosophical questions, someone has to monitor 'maker-and-checker' and someone else has to monitor passwords.
Last few years have shown that companies who took compliance seriously have already started taking it beyond mere compliance and have started looking at their investments to endow them with a significant competitive advantage going forward.
Compliance has already morphed many times in a short span of 4 years and discounting all hype, hoopla and buzzwords, is already showing signs of becoming a valuable new field of work under the umbrella of Governance, Risk and Compliance or GRC for short.
I am excited to be a part of this new opportunity and look forward to working and networking with professionals with views and experiences to share on this platform.
Buck Kulkarni
If these companies played with Hedge Fund types and took them to the cleaners, probably they would have never made it to the headlines because both parties were playing with full knowledge and consent. But when they destroyed the nest-eggs of thousands of hard-working middle-class employees and share-holders, they crossed a politically sensitive line and faced the consequences.
Sarbanes Oxley is probably the most high-profile legislation passed to control the corporate behavior but there are many others (both old and new) and while many of them (still evolving) do not offer very clear or concrete solutions, they do a great job of bringing compliance into corporate consciousness and hopefully, will evolve into a very meaningful control mechanism over the next decade or so.
The first set of reactions of the corporate world were very predictable - this is not practical, this puts heavy burden on the already stretched corporate staff and profits, why should everybody be punished for a few crooks' behavior, this will kill capital markets and the entrepreneurial spirit, if this goes on, the only way is for companies is to go back to being private and so forth.
A lot of that brouhaha died down but a lot of it did not. The overriding theme started emerging that it was all about INTERNAL CONTROLS and there was not much really that could be said against it. Good companies had them in place much before SOX came in and even a cursory look at the corporate history shows that those who did not have it perished either to internal or external forces.
An extremely healthy debate has ensued over the past 4-5 years about the overall compliance paradigm. What is corporate governance? Ethics are at the root of all responsible behavior but what is an ethic? Ethic seems such a surreal and abstract concept to discuss and apply to the hard, rough-and-tumble world of business. Board members, senior executives and professionals were brought face to face with such issues for the first time (at least on such a large scale) and the first few encounters were ugly and un-nerving, to say the least.
A lot of people (including chairmen and CEOs) were lost (may be conveniently, at times) and wanted someone to take the responsibility of guiding them to compliance. SEC and AICPA and others have risen to the challenge and an increasingly coherent body of knowledge is becoming available to corporations on governance, compliance, risk management, internal controls and best-practices frameworks.
The biggest learning has been that compliance is a state-of-mind and binds all employees and business processes together like nothing else can. While the Chairman and CEO may wrestle with weighty philosophical questions, someone has to monitor 'maker-and-checker' and someone else has to monitor passwords.
Last few years have shown that companies who took compliance seriously have already started taking it beyond mere compliance and have started looking at their investments to endow them with a significant competitive advantage going forward.
Compliance has already morphed many times in a short span of 4 years and discounting all hype, hoopla and buzzwords, is already showing signs of becoming a valuable new field of work under the umbrella of Governance, Risk and Compliance or GRC for short.
I am excited to be a part of this new opportunity and look forward to working and networking with professionals with views and experiences to share on this platform.
Buck Kulkarni
posted by Buck Kulkarni at 3:37 PM
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