With increasing scrutiny of companies’ corporate governance and compliance systems, the introduction of a new diagnostic tool to measure compliance mathematically is an important step in assuring directors that their companies can meet their obligations in an increasingly regulated environment.
The ‘do-it-yourself’, numerical benchmark compliance tool ‘Complir8’ believed to be a world-first, is the brainchild of compliance advisers Brian Sharpe and Randal Dennings from leading law firm Clayton Utz.
Leader of the Clayton Utz National Compliance Division, Mr Dennings says that while the concept sprang from his and Mr Sharpe’s long association with the business sector’s compliance needs, its arrival is fortuitous, given the current climate.
“As a diagnostic tool this numerical measurement kit which can be used in conjunction with Australian Standard AS8306, or any other compliance system, will have general application for a lot of companies. However, we see it as being especially valuable right now for listed companies facing the impending requirements of the Financial Services Reforms.
“As the regulatory process becomes increasingly demanding, company boards are becoming more and more aware of the need for assurance that their systems are truly effective,” Mr Dennings said.
Brian Sharpe says that ’Complir8’ offers companies a straightforward process for evaluating their compliance.
“’Complir8’ is far more robust then just assessing a compliance system against AS3806, because many practical ‘drivers’ are needed to make any compliance system work. ‘Complir8’ incorporates both AS3806 requirements plus over 70 practical drivers. The result is that ‘Complir8’ evaluates both your system’s structure and whether it is working in practice.”
“Its appeal lies in its numeric system, with values assigned to each significant step in the system, enabling it to be reviewed and rated. This rapidly identifies the company’s weak points against predetermined criteria and then enables the company to track continuous improvement. It also provides an assurance mechanism so that directors will be able to determine that their responsibilities are being discharged and the company is protected. It is really a very clear cut measurement process that for the first time enables an objective evaluation as to whether the company is on track and complying. ”
“This quantitative method is far more precise than the previous qualitative methods and it can be readily adapted to any kind of compliance, corporate governance, or risk management system. Moreover, it gives results in the ‘metrics’ so much favoured by Boards today.
“We are really extending principles that are already well-accepted in quality and strategic management,. We tested a pilot last year in a master-class at the Australian Compliance Institute and it won a lot of interest. Already a number of major Australian companies are expressing interest in adopting it.”
Feedback for the new process indicates that it is being seen as the missing piece of the compliance jigsaw .
Brian Sharpe continued, “In the long term it will save money because it means that companies will no longer be required to do as much research to determine the areas requiring improvement. It will clearly indicate that, allowing them to concentrate on where they are going to get the best results.”
Randal Dennings is in no doubt regarding its value to the current corporate governance debate. “There is a big challenge in trying to give today’s directors a sense of confidence in their compliance and risk management systems. Boards are now turning to their audit committees and systems and asking how can they be assured there is an appropriate due diligence defence in place.
“These concerns are gaining a sharp edge with the impending FSR compliance and the ASX Guidelines with directors needing to be able to satisfy themselves that robust due diligence has occurred.
“An organisation that takes a proactive approach to its compliance and business management by using tools like these is, in our opinion, likely to be better organised and prepared to take on the challenges that lie ahead.”