Internal Control and Statutory Compliance

 Statutory Compliance (Internal)

All the organization concentrating on Statutory Compliance since it is a Mandatory requirement as per different Acts. As mentioned  in my earlier post, the proper system to be in place for a real control over statutory obligations.

But , there is a requirement of Internal Control mechanism also  required for the purpose of the smooth running of organisation.

From my 30 plus years of experience , I found this tracking of internal compliance is not given much importance.

I give below one of Internal Compliance system :-

Issue of Bank Guarantee : 

Bank guarantee can be issued to different government organisation and also to the customers .  The initiator of the BG is the Sales/Marketing Department in case of BG to be issued to the Customer.. The responsibility of the BG creation is Finance Department. Most of the companies , the finance department will maintain the BG details in the Excel or any other software's and send the reminder manually to the Marketing/Sales department for their confirmation to renew or collect it from the customer on expiry. The Marketing team also maintain the records and follow up with the customer. But there is no proper system and it leads to expiry of the BG which leads to cancellation of contract with customers. 

In case of the BG issued to the Government Authorities against the approval, license etc etc, if not renewed on time it become the Statutory violation and even it leads to closure of the business. As mentioned above, the two department are maintaining the details separately and they have to keep on track every day for renewal. If the person looking after this area is on long leave or not in the organization the situation will become worse.

To avoid all this , the company should develop their own system to get the dash board to the concerned department heads and get the alerts in the email well in advance so that the renewal should take place in advance.