Who is responsible for the company's compliance with laws and regulations?

 



Laws and regulations may influence company`s financial statements in various ways:


(a)    Prescribe applicable financial reporting and tax framework

(b)   Establish the legal rights and obligations of company

(c)    May require specific disclosure in financial statements of company

(d)   Impose fines and penalties on company in case of non-compliance

(e)    Revoke the operating license of a company

It is the management of company under the oversight of those charged with governance is responsible to ensure that the company’s operations are conducted in accordance with laws and regulations.

Management may apply the following policies and procedures to detect and prevent non- compliance with laws and regulations:

·        Monitoring legal requirements and ensuring that operating procedures are designed to meet these requirements

·        Establishing and operating appropriate systems of internal control.

·        Developing, introducing, and following a code of conduct.

·        Ensuring employees are properly trained and understand the code of conduct

·        Monitoring compliance with the code of conduct and responding appropriately to discipline employees who fail to comply with it.

·        Engaging legal advisors to perform of monitoring legal requirements

·        Registering of significant laws and regulations with which the company has to comply within its particular industry and a record of complaints.

In large companies, for these policies and procedures may be responsible the following bodies 

·        An internal audit functions.

·        An audit committee.

·        A compliance functions.


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