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SAICA NEWS: Compliance Risk Made Easy


For some years now the role of the compliance officer and conceivably the concept of compliance risk (which is also known as legal risk) were associated with the financial services industry. Many people might have thought that only laws impacting on this industry have to be complied with. This perception could as well have been fuelled inadvertently by the fact that the preface and the foreword in the Generally Accepted Compliance Practice document (GACP) of the Compliance Institute of South Africa (CISA) also stressed how the principles, standards and guidelines provided for in the GACP would be beneficial to the financial services industry.

A close scrutiny of the many good examples provided in the training material of CISA tends to show some bias towards the financial services industry, and further cements the notion that compliance is primarily a financial services industry practice. It is heartening to learn that CISA made it lucid during its annual conference in August 2009 that the risk relating to failure to comply with the laws of the land cuts across sectors and industries. An example that knows no industry borders is the legal risk of not complying with the numerous provisions emanating from the law of employment, which is generally applicable to all employers of all sizes, both public and private sector.

Notwithstanding the fact that there are inherent challenges of complying with the law due to the complex regulatory environment, this commentary is intended to show that compliance with the law should naturally not be seen as a burden. Juristic persons have to find creative ways of dealing effectively with this risk in order to make compliance with the law a lot easier. A concerted effort to follow an open-handed interpretation of the provisions of the law could assist a business in achieving its set objectives. Complying with the law simply because we are afraid of fines, penalties and all other sanctions is just not good enough.
As business we must strive to find useful ways to make the legislative environment work for us. To be able to do this, our interpretation of the applicable provision of the relevant piece of legislation should enable us to extrapolate the benefit for ourselves and for our businesses. The positive interpretation suggested here is not intended to compromise compliance with the law. On the contrary, it emphasises the fact that the law must be read in such a manner that a business finds useful ways to contribute to making the law practical, with benefits accruing to the business, and with no intentional attempt to infringe the law. This is what I call the benefits of using compliance to your advantage.
Business must realise that it cannot be the intention of a democratic legislature to make laws that harm business, stifle competition and cause massive unemployment. If business feels a law is unduly impeding the efficient functioning of business having regard to the provisions of the Bill of Rights, business has a responsibility to knock on the right doors to get such legislation changed, notwithstanding the time it may take. In this way, dealing with legal risk will not be static but can be channelled to where business wants it to be. Hence each business must make a quality decision to become an active part of the citizenry and a diligent participant in influencing policy and law- making to accommodate the concerns of business. This reminds me of a well-known saying that ‘if you do not ask you will not get; if you ask you might get’.

As part of its vision to lead and influence, SAICA has teamed up with a reputable law firm to develop a Toolkit that will be published in 2010 entitled ‘Employer Compliance’. This volume will provide various ways of complying with the laws that affect a business in its capacity as an employer. The definition of the word ‘employer’ in this volume is not confined to what many people know as its definition as provided for in labour legislation. Pieces of legislation that use the word ‘person’ in a relationship where an employment relationship exists are interpreted to mean an employer, where applicable. All pieces of legislation that mandate an employer to do or not do something will form part of this volume, and an attempt will be made to suggest control measures that will see many employers realise how complying with the law can be made more appealing. Other volumes of the Toolkit that will be developed in the near future include ‘Client Compliance’ and ‘Business Compliance’. With regular updates and refinement of the Toolkit, managing compliance risk will be less tedious and burdensome if we all play our part. SAICA is ready. Are you?

Geoffrey Ngonyama, BA, BA Hons, B Proc, MBA (course work) and LLM. is an accredited Compliance Officer with the Compliance Institute of South Africa