out 31, 2016
Brazilian Companies Enter “Age of Compliance”
More and more Brazilian companies understand the importance of compliance auditing. It’s not only a market advantage, but also the best way to secure the longevity of a business. After all, companies with weak control systems are more likely to show operation failures and failed processes. That’s why Brazilian ventures have heavily invested in governance, risk management, and compliance.
Data from the Brazilian Ethics and Health Institute (IES) is a good parameter to measure how far Brazil has entered into the “Age of Compliance.” Out of the 267 member corporations, three-quarters already have a structured compliance program, or are in the process of implementing one. Furthermore, 79 percent of companies have implemented – or at least have started to implement – a clear code of ethics, showing a preoccupation with handling business as transparently as possible. “We have already kicked off our improvement programs in Brazil, and that trend is irreversible,” explains IES director Claudia Scarpim.
Scarpim’s statement has been corroborated by the American Chamber of Commerce in Belo Horizonte. The AmCham analyzed 70 companies, 40 percent of which had already included structured and well-functioning compliance protocols. According to Exame, Brazil’s leading business magazine, compliance represents the most promising career in Brazil right now. The country has adopted several international protocols in both the private and public sectors. In 2015, Brazil approved a very strict Anti-Corruption Law.
One of the reasons for the rise of compliance is the fact that Brazil has become increasingly more connected to the world economy. And compliance protocols are the basis for international cooperation deals.
So how does one encourage compliance?
Experts say that companies should clearly keep in mind the differences between compliance and internal auditing. Among those differences, one requires special attention: having internal audits does not indicate compliance, as both concepts actually depend on one another. Compliance includes establishing the rules of a company, setting processes and individual training, among other concerns. Internal auditing is more about monitoring whether or not those rules are being respected. Therefore, one cannot exist without the other.
Over the last ten years, the compliance sector has grown at double-digit rates. Now, even many small businesses have a sector dedicated to it, and demand that their suppliers also obey strict protocols. A sign at the headquarters of Itaú, Brazil’s largest private bank, sums up how Brazilians view business: “Ethics are not negotiable.”