When you hear the term “regulatory compliance”, what do you think of? Rules? Annoying paperwork? Repetition?
The truth is, regulatory compliance in how you keep company records can make all the difference in an organization’s welfare and future. It’s critically important.
Regulatory compliance is when a company obeys the laws, rules, and regulations that have been created for that company’s particular industry. When regulatory compliance is specific to filing and record-keeping, it means that all files, records, and paperwork are documented properly under those rules and regulations.
The benefits to a company from keeping compliance-friendly records is huge. Not only will it help you in a legal pinch, but the company will also benefit from a measuring/information standpoint, which could result in increased market access and reduced product/service liability.
The information in your company’s files can be anything from records of illness and accidents, to how your machinery works, to simple HR paperwork. Generally, these records tend to be things such as payroll and personnel info, contracts, permits, leases, licenses, insurance, and copyrights.
Office administrators and filing clerks should be very well-prepared and trained in order to ensure compliance when filing. It’s also important that they understand not only the penalties for non-compliance, but the even bigger threat of the damage it can do to a company (even if that company is thriving).
First of all, there are a few best practices that record keepers and office clerks should be sure to always abide by, no matter what the industry:
Practice the appropriate legal policies and procedures to ensure a company’s audit ability, because should the situation arise, an audit should be made as smooth as possible by having all records and information in place.
Practice methods that will deliver record information in a quick and convenient way, and keep records documented and filed so that they’re convenient to access and in an format that’s easy to understand.
Practice maintenance of records, taking into account legal, regulatory, fiscal, operational, and historical requirements.
As you might imagine, regulatory compliance varies from industry to industry.
For example, although retailers are exempt from the requirement of being certified, they must still keep sufficient records demonstrating compliance. This means that retail records should include information such as date of purchase, source, quantities, and organic certificates listing the specifics for organic products. Retail also has its own set of safety rules and prohibited substances (like sanitizers, pest control materials, and non-organic products). Records for retail companies are very important if the organic status of their products is ever questioned.
Yikes: A well-known clothing retailer reached a settlement with ICE regarding I-9 documentation violations discovered during a 2008 audit. The company will pay more than $1 million dollars in fines and must cooperate with federal authorities by modifying its electronic I-9 management systems. Source
In a targeted industry like hospitality, hotels and restaurants have much higher levels of risk, since they collect vast amounts of private data from customers as a part of their day-to-day operations through credit card transactions, online reservations, and rewards programs. The information in this industry is sensitive, and can be both personal and financial. Therefore, the hospitality industry has its very own set of regulatory compliance rules and regulations. Also, all businesses must maintain books and records to provide back up and support for financial statements and state and federal tax returns as well as in potential legal proceedings.
Yikes: Wendy’s admitted payment systems at some of its franchised stores were compromised between October and June. The company released a list of more than 1,000 stores across the U.S., including about 20 in central Ohio, where malware was discovered during an investigation. Source
And if your company deals at all with any sort of patient health records, be on high alert that record keepers must take special care to work within the rules of HIPAA (the Health Insurance Portability and Accountability Act). Failing to follow HIPAA standards can result in fines from $100 to $500,000 per incident or compromised record, up to a maximum of $1.5 million a year. One breach involving records that include patient records could be extremely expensive to an organization, both directly by these penalties, and indirectly by bruised reputations and damaged customer confidence.
Another serious consideration is banking and financial regulations. If your company’s records contain information that includes your customers’ monetary information, they must be compliant with federal laws and regulations. This can include the Federal Financial Institutions Examination Council (FFIEC) standards; the Graham-Leach-Billey Act; the Sarbanes-Oxley Act, and the Dodd-Frank Wall Street Reform and Consumer Protection Act. Not complying with these regulations may be the most serious issue of all.
From the biggest companies to the smallest, it’s absolutely crucial to file correctly and review your HR records to make sure everything is gelling with the HR laws. This is a huge deal because having correct records in this area can help prevent potential liabilities and employee lawsuits. Your records for hiring, employee pay, benefits, policies & procedures, performance reviews, and employee discipline & termination could help you greatly in the case of a lawsuit.
With people suing left and right these days over discrimination, correct HR filing couldn’t be more relevant and important. Job descriptions and interviews must be legally compliant and meet state requirements; interview questions must be appropriate and relate only and directly to the applicant’s ability to perform the duties of that position. Employee pay must adhere to the schedule of state laws as well, and employee policies and performance reviews need to be updated and maintained regularly.
As you can see, when it comes to filing, regulatory compliance is an absolute necessity. Each industry has its own set of rules, and it’s critical to obey these rules and file appropriately. It can honestly be the difference between your company’s success or failure, so ensure that all office clerks and record keepers are filing accurately, thoroughly, and in such a way that adheres to every single law.
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