Ethics Compliance and Governance
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Transcript of Ethics Compliance and Governance
ICSI-GSCM-Oct 16Ethics, Governance & Compliance
21st October 2016
Ethics- “Is it right even if legal”
Ethics is a set of principles of right
conduct or a system of moral principles
Business ethics : the principles, norms and standards for conduct of ORG.
activities, relationship with
stakeholders
Professional Ethics: Group of people
who adhere to a set of ethical standards.
Professional virtues independence, integrity and
objectivity etc.
Why-Ethical Corporate behavior
Strengthening relationships
Value creation
Brand- image
Standardization
Influencers
Legal, Political & Judicial EconomicChanges in legal environment Recession Introduction of CSR Consumer behavior- PSU banking vs. Private banking
Introduction of various cess/taxes Cost benefit & outsourcingStrict anti-corruption laws Ease of dealing/doing businessIntroduction of women directors Economic policiesPOSH at workplace – Vishaka Vs State of RajsthanPublic Liability Act- MC Mehta case
Social TechnologicalChanging social trends –corporate upbringing Standardization
Up gradation of skills Systemic controls & less human interactions
Changing employee-management relationships Virtual meetings- resulting decline in relationship between management and employees
Environmental IT securityEnvironmental factors- pollution PrivacyMore video/ tele-conferencing –reduction of
pollution by vehicular movements
Code of ethics- IndicativesCode of Ethics- Corporate Conduct Employee Conduct1. National interest
a. Participation in overall economic development of the country
b. Alignment with public policy
1. Ethical conduct- professionalism, honesty & integrity
2. Legal & Regulatory compliance
2. Financial reporting and recordsa. True and fair financialsb. No willful/material misrepresentationc. Appropriate records
3. Concurrent employmenta. For profitb. Not for profit
3. Health safety & Environment 4. Conflict of interest4. Public representation 5. Insider trading5. Third party representation 6. Protecting company’s assets6. Shareholders value 7. Non discrimination & non harassment7. Political non alignment 8. Substance abuse
9. Anti-corruption- Gifts & entertainment10. Political activities11. Communicating with regulators12. Appropriate use of computer assets13. Privacy14. Record retention15. Confidentiality, trade secrets & business practices
What do you do?
At a function organized by your company in your company premises, shortly before the end of the function, you notice that your manager is busying putting cartons of drinks into the boot of his car. In that split of a second; he glances at you, smiles and says; ‘what the company doesn’t know wouldn’t hurt the company; erase this from your memory’. Then your supervisor says his goodbyes to everyone including you, and he drives out of the premises.
A supplier overhears a conversation amongst your colleagues that today is your birthday; she quickly goes out to the shopping mall next to your office building to buy you a card and a box of chocolate. She comes back to your office, meets you at the reception, and wishes you ‘a happy birthday’ and gives you the birthday card and the box of chocolate.
A supplier overhears a conversation amongst your colleagues that today is your birthday; she quickly goes out to the shopping mall next to your office building to buy you a card and a box of chocolate. She comes back to your office, meets you at the reception, and wishes you ‘a happy birthday’ and gives you the birthday card and the box of chocolate. The supplier is one of the three bidders your department is considering for a current tender.
One of the accountants in your department has resigned and needs to be replaced. Your manager tells you that he wants to appoint Tyler, an accountant with one of your suppliers. He tells you to nevertheless go through the motions of following procedure by advertising the post internally. You agree that Tyler has the requisite qualification for the post. Once the applications have all been received, you realize that several more competent candidates from your subsidiary companies have applied. Your manager is however adamant that Tyler should be appointed.
Ethical decision making
What alternatives are available for my
consideration? If Yes Are they
legal? If No , Stop!
Do they meet with professional/ organizational
ethical standards? If No, Stop!
Will I be able to disclose my
actions? If No,
Stop!
Ethical Decision
Implementation
Communication Recruitment
Speaking up Induction & Training
Disciplinary Procedures
Ethical Corporate Culture
Performance Management
Board/ Directors – Focal Point & Custodian of CG
Ethical Leadership & Corporate Citizenship
Effective & Independent Audit Committee
Governance of Risk
Compliance with Laws, Rules, Codes & Standards
Effective Risk Based Internal Audit
Governing Stakeholder Relationships
Integrated Reporting & Disclosure
Corporate Governance
Corporate Governance is a system by which a company is directed and controlled
Legislative framework- GeneralThe Companies Act, 2013 SEBI Regulations
Board composition – introduction of IDS
Resident Director
Nominee directors are no longer IDs
Women Director
Duties of Directors
Code and letter of appointment to Independent Directors
Performance evaluation of directors
Mandatory committees
a. Audit committee
b. Nomination and remuneration committee
c. Stakeholders relationship committee
d. Corporate social responsibility committee
Board of Directors- 1/3 or 1/2 to be ID
Women director
Code of conduct
Audit Committee- 2/3 to be ID
NRC- 1/2 to be IDs
Stakeholder relationship Committee
RMC
Vigil Mechanism
Related party transactions
Compliances for subsidiary company
IDs & Sr. Mgmt. obligations
Quarterly reporting
Other disclosuresAdobe Acrobat
Document
Internal corporate governance controls
Monitoring by the board of
directors
Internal control procedures and
internal auditors
Balance of power
Monitoring by large
shareholders
Monitoring by banks and other large creditors
Competition
Debt covenants
Demand for and
assessment of performance
Government regulations
Managerial /labor market
Media pressure
Takeovers
External corporate governance controls
ComplianceCompliance is a comprehensive program that helps institutions and their employees conduct operations and activities ethically; with the highest level of integrity, and in compliance with legal and regulatory requirements.
Why Compliance Programs– Legal and Regulatory requirements and organizational policies– Fiduciary Responsibility– Disclosure and Internal Control Standards– Foster a culture of ethics and compliance – Understand the nature of risks and potential exposures– Identify and manage risks that impact the institution’s reputation– Integrate the compliance program into ERM Framework
Influencers- GeneralBoard and Audit Committeeo Independent and engaged?
Management’s Philosophy and Operating Style
o Communicates by word and action there is support for compliance and commitment to ethics
o Code of Conduct o HR Practices and Policies: Recruitment and hiring; orientation; evaluation,
promotion and compensation; disciplinary actions
Organizational Structure o Centralized vs. Decentralizedo Assignment of Authority and Responsibility
Risk Culture (Appetite and Tolerance)
Key drivers of effective compliance program
CCO reporting to Board level committee
Written policies and procedures;
Training and education
Lines of communication
Well-publicized disciplinary guidelines
Internal compliance monitoring
Periodic Risk Assessments
Compliance toolkitChief Compliance Officer Job
Description
Office of Compliance Mission Statement
Compliance Officers Working Group Charter
Audit and Compliance Committee Charter;
Audit and Compliance Committee Calendar
Compliance risks analysis
Organization’s objectives, structure and operations?
Compliance Risk Identification
Risk Assessment- Likelihood and impact
Risk Evaluation- Appetite & Action planning
Risk Mitigation
Monitoring, Review and Corrective Action,
Communication
Thank you
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Vimal Kishor9987719880
ICSI-GSCM-Oct 16