There is an urgent need for comprehensive training on emerging compliance practices, says Angus Young
The compliance profession has arguably emerged out of recent regulatory reforms and audit obligations. Many recruits are drafted from people with legal or accounting backgrounds for the simple reason that their academic training provides some skills and knowledge on how to do the job. However, this also creates some constraints and occupational hazards.
In the case of law students, while knowing the law and identifying problems are quintessential skills, lawyers are also trained to be defensive given the nature of litigation in Australia. This could be difficult for new recruits when dealing with regulators or other stakeholders because the underlying assumption of regulator-regulatee relations is based on a co-operative framework, not an adversarial one.
As regulatory obligations continue to mount, compliance professionals face new roles in corporate governance, risk management, ethics, and policing internal company policies. This means the current skills levels are often inadequate to deal with the complex web of issues that has arisen. The demand for more training and education is an acute problem.
At university compliance professionals are not taught how to deal with different departments within an organisation and how to respond to various regulatory bodies. Much-needed skills tend to be gained via trial and error. The risk for companies recruiting people without compliance experience is far too high because mistakes could be costly.
Yet only two out of 38 universities across Australia offer courses on compliance or a compliance-related specialisation. The courses are taught by the Centre for Investigative Studies and Crime Reduction at Charles Sturt University, and the Centre for Regulatory Studies at Monash University. Both these institutions offer only postgraduate courses.
ACI is the leading accreditation body in the region for compliance professionals. Ideally accreditation should be post-academic training, as occurs in the accounting and legal profession. Efforts to enhance compliance as a profession have been boosted with the launch of the ACI Compliance & Regulatory Journal to attract more academic research in this new sub-discipline and the pooling of senior practitioners’ experiences.
Nevertheless more research, innovation and competition in the training of compliance professionals is needed.
A combination of legal and management subjects is essential. But those subjects have to focus on the three categories of compliance activities: namely, structural, relational, and operational.
Structural considerations require each company to design an appropriate corporate structure where compliance could either be a separate department, or integrated with other existing departments to optimise regulatory compliance and deliver better organisational efficiency. Stemming from this is the line of reporting and how tasks and responsibilities are organised.
Relational factors are more complex. Compliance professionals have to manage the relationship with their colleagues across the organisation to minimise and reduce the risk of non-compliance. More importantly, relationships with governmental bodies and departments have to be constructive to enable regulators to understand the difficulties in complying with certain legal obligations.
On operational issues, applying compliance procedure, policies and risk assessments is central. So how are they developed, and how often should they be reviewed? These are some of the practical issues compliance professionals have to face on a daily basis.
Unless educating and training this profession is taken seriously, compliance officers and managers will be ill equipped to deal with their increasingly complex and onerous legal obligations.
Angus Young is a research associate at the Centre for International Corporate Governance Research, Victoria University.
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