The quality of a firm’s compliance controls is climbing higher on the priority stack in both the boardroom and on regulators’ examination checklists. In February, for instance, the founder and CEO of a multi-billion dollar human resources software company stepped down over inadequate compliance procedures and internal controls.
The same month, the Financial Industry Regulatory Authority (FINRA) urged  firms to review their supervisory and compliance controls as a top focus for the year: “We will assess five indicators of a firm’s culture: whether control functions are valued; whether policy or control breaches are tolerated; whether the organization proactively seeks to identify risk and compliance events; whether supervisors are effective role models of firm culture; and whether subcultures that may not conform to overall corporate culture are identified and addressed.”
When FINRA conducts reviews as part of this exam sweep, they will evaluate the processes a firm uses to identify policy breaches, including the types of reports or other documents a firm relies on, to determine whether a breach has occurred. FINRA is particularly interested in how a firm measures compliance with its cultural values and what metrics, if any, are used.
Implementing integrated compliance management software can help a firm establish and maintain regulatory, cultural and ethical values. Risk assessments and staff certifications can instantly be generated, for example, along with output-ready reports. Compliance documents and data can be centrally stored and easily accessed, providing regulators with evidence on-the-fly that a financial firm or consultant is taking proactive steps to maintain a culture of compliance.
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