Page 31 - Pakistan-Accountant-April-Jun 2018

The onus of compliance with laws and regulations fall on all of us and it is our combined responsibility to ensure that we all act within the given regulatory framework and report deviations to the regulators. ▪ The Axact Scandal: Pakistan’s corporate sector was stunned ▪ Make recommendations to the Board of Directors regarding when allegations of fraud were hurled by the international scope and effectiveness of the compliance management community in 2015 on the world renowned Pakistan based systems. IT Company Axact. Inquiries into affairs of the company were simultaneously launched in and out the country which Compliance Manager revealed the staggering detail of the scam. It is alleged that ▪ Deal with violations of guidelines and procedures. Axact took money from over 200,000 people all over the ▪ Evaluating control environment. globe to issue fake education degrees and used several shell ▪ Adopt procedures to identify risks. companies in United States and other Caribbean countries to route illicit money. The prosecution of the owner of Axact is Public interest companies engaged in providing essentials services still underway. to public at large have understood the need for higher moral duty of compliance with these laws and regulations. The regulators of ▪ Pakistan’s placement on terror finance watch list: Although these companies usually take additional precautions and measures Pakistan’s laws and regulations mostly cater to our domestic to ensure transparency, competitiveness, and ethics in their daily needs, these regulations might not be acceptable to the internal operations and also ensure that malpractices, if any, are severely community who since long have been pushing for complete punished. Recent accountability drive undertaken by institutions overhaul of our entire anti-money laundering function. and the honourable courts is also meant to ensure arrest of public Recently Pakistan has been placed on the Financial Action Task office abuse, detention of corrupt office bearers and recovery of Force grey list. This move shows seriousness of the issue and graft, bribes and money earned using unfair means/illegal practices. commitment of the international community to curb money laundering menace. (Reference https://www.bloomberg.com/ Over a period of time, we have learnt that businesses that news/articles/2018-02-23/pakistan-is-said-to-be-placed-on- comply with applicable laws and regulations turn out to be terror-financing-list-from-june-jdztwvir) more successful as compared to their non-compliant peers. Organisations involved in malpractices might get some benefit in The corporate world took to this challenge and devised its own the short term but pay a heavy price when they get caught, often set of laws, rules and regulations for adherence to prevailing resulting in complete shutdown of operations, confiscation of the ethical, moral and legal standards. Companies have gradually assets and severe punishment of individuals involved. Some of the started setting up of a separate compliance function within the benefits of a compliant organisation include improved operations, organisation to tap underlying risks and threats. The compliance reduced legal problems and better public relations. function in an organisation usually starts with: - the board of directors assuming responsibility for compliance In fact, companies are now going the extra mile and opting for and developing a comprehensive policy after taking into ‘above and beyond compliance’ approach, i.e. taking care of consideration interests of various stakeholders such as their stakeholders beyond legal and regulatory requirements employees, customers, suppliers, shareholders, government, resulting in increased morale and motivation and in the process regulators, environment and society. offering various growth prospects. This is being done by focusing - A sub-committee of the board of directors making procedures on engagement and empowerment of all stakeholders via and guidelines to ensure that the board’s policy is fully introduction of various initiatives such as personal development observed and nonconformities if any, are fixed timely. programs, customised products, flexible plans, feedbacks and - A compliance department working under the supervision of market surveys, green environment programs and Corporate sub-committee ensuring compliance of approved procedures Social Responsibility (CSR) frameworks. and guidelines, also providing feedback on the applicable legal and regulatory framework governing the organisation and its As part of routine audit, auditors also obtain reasonable stakeholders. assurance as to the compliance of laws and regulations by the auditee company. Any non-compliance is duly reported to Various companies now opt to outsource the compliance function either management, board of directors, members, or in some to a firm of professional chartered accountants, whereas, others cases, regulatory organisations as part of their whistleblowing have given additional role to the internal audit department. responsibilities. The corporate sector regulators such as Securities Whatever the case maybe, the corporate world now appreciates & Exchange Commission of Pakistan, State Bank of Pakistan, the significance of compliance with legal framework and are Pakistan Stock Exchange Limited and other allied institutions investing more time, effort and money towards achieving one such as The Institute of Chartered Accountants of Pakistan closely hundred percent compliant status. monitor the applicable financial, corporate and regulatory frameworks of different sector companies working in Pakistan to Board of Directors ensure transparency of operations. ▪ Develop compliance policy and align with organisation goals Nevertheless, the onus of compliance with laws and regulations and objectives. fall on all of us and it is our combined responsibility to ensure ▪ Establishment of compliance committee and setting of the that we all act within the given regulatory framework and report terms of reference. deviations to the regulators. Only then, we as a nation will prosper. Compliance Committee ▪ Develop procedures and guidelines for ensuring compliance of laws and regulations. ▪ Oversee the compliance management function. The writer is chartered accountant working as internal auditor in Pak-Arab Refinery Limited. April - June 2018 The Pakistan Accountant 29