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Rupinder Malik

The author is a Partner at J. Sagar Associates

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Leveraging Trainings to Address Compliance Risks

The authors share their views on a 2020 survey found that 63% of junior level employees feel that the management does not talk enough about integrity. Corporates at all levels are under immense pressure to adapt to what has been labelled as the ‘new normal’. Amidst this, it may be easy to let focus slip from compliance trainings.

Trainings During a Crisis? 

A 2020 survey found that 63% of junior level employees feel that the management does not talk enough about integrity. Further, nearly half the surveyed employees feel that there could be personal consequences for reporting any wrongdoings. Many more such surveys have a uniformly disturbing finding – the ongoing economic crisis is likely to increase fraud and corruption risks manifold. With stressed budgets, workforce cuts, increased regulatory touchpoints, shorter deadlines and supply chain disruptions across the board, corporates at all levels are under immense pressure to adapt to what has been labelled as the ‘new normal’. Amidst this, it may be easy to let focus slip from compliance trainings. 

Pandemic or not, there is no relaxation on criminal liability for fraud and corruption. Trainings are both the first and last step to risk mitigation and the compliance framework of any company is incomplete without frequent and robust trainings. They are more important now than ever before, to guide employees experiencing one of the most uncertain economic conditions in modern history. 

An effective training regime must be that – a regime. We often see companies do a one-off compliance training as part of the induction process, which happens alongside a number of other HR onboarding documentation. In many companies, this may be limited to a boilerplate clause in the appointment letter and a standard form presentation that reminds employees that among other things, fraud and bribes are illegal. 

Making Compliance Ideals Heard 

Compliance training should be treated on par with vocational training, insofar that compliance is taught, not merely displayed through slide decks. In a setting where employees may come from other organisations with a lax approach towards compliance, from a local culture where bribes are seen as the norm or are simply inexperienced when it comes to handling corruption risks, trainings have large shoes to fill. An effective training framework will seek to educate employees of all levels and demonstrate practical methods of implementation on ground. What they should be effectively trained on, is the manner in which such risks are to be reported, handled, avoided and mitigated. 

Compliance trainings must be headed by a dedicated compliance officer or in the absence of one, a senior member of the management/administration, who can effectively set the tone from the top, in close collaboration with external experts who can offer impartial guidance. By leaning on e-learning methods, trainings can be individually delivered, monitored and disseminated in a more targeted manner. Recent learning trends have proven that e-learning can be just as effective as in-person trainings and therefore, online platforms can be leveraged to continue training sessions even in extensive remote working situations. 

Tailoring Training Techniques

Trainings need to be tailored to the audience they are catering to. For employees that routinely interact with government officials, for instance, there needs to be more emphasis on risk avoidance and minimization strategy. For employees involved in processes and payments, there needs to be education on fraud detection and accounting controls. For senior-level management, trainings must be more focused on corporate governance, accountability and transparency regulations, reporting requirements and so on. 

The effectiveness of a training program should not be gauged through the number of employees sitting for it or signing a paper indicating that they did indeed sit through it. Companies must look for indicators that their training programs have had. An increase in anonymous reports of wrongdoing, for instance, is an indicator both of heightened awareness and of a culture of speaking up, both of which can go a long way in strengthening a company’s compliance framework. 

Trainings as a Risk Mitigation Strategy 

The US Department of Justice (DOJ), which enforces the (US) Foreign Corrupt Practices Act for actions in countries including India, provides detailed guidance on the evaluation of corporate compliance programs, which tests, among other things, the actual effectiveness and resources provided by the program. A training for the sake of training may fall short of the high standards set by the DOJ. 

Companies which do not fall under the purview of the DOJ have reason to bear caution as well. The Prevention of Corruption Act, 1988, India’s primary anti-corruption legislation, was amended in 2018 to introduce corporate liability for corruption, but also introduced the concept of an “adequate procedures” defence. While the full extent of this defence has not yet been prescribed, it is highly likely that an effective training regime will form part of the ‘adequate procedures’. 

Compliance experts, proprietors and management need to ask themselves simple, yet important questions to gauge the efficacy and usefulness of their training regime – is the training effective or a mere tick-in-the-box?


 


Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house


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