Compliance » Operationalizing Compliance: The Crucial Role of Payroll in Corporate Governance

Operationalizing Compliance: The Crucial Role of Payroll in Corporate Governance

February 15, 2024

Operationalizing Compliance: The Crucial Role of Payroll in Corporate Governance

The 2023 Evaluation of Corporate Compliance Programs (ECCP) emphasizes the crucial role of compliance professionals and corporate payroll functions in operationalizing effective corporate compliance programs, particularly in areas related to payments and payroll. According to an article by All Things Compliance, The ECCP highlights the significance of payments in compliance, addressing issues such as payments to foreign officials and third parties, as well as the concealment of bribes within distributor payments.

There is a need for risk-tailored resource allocation, with companies focusing on high-risk areas rather than low-hanging fruit. The ECCP also looks at payment and payroll systems, questioning the business rationale behind third-party involvement and examining mechanisms to ensure proper contract terms and compensation.

Payroll has a significant role in preventing, detecting, and remediating anti-corruption compliance violations, through controls to prevent fraudulent payments such as thorough documentation and audit trails. With measures like these in place, payroll is positioned as a frontline defense against compliance violations, with responsibilities extending throughout the management chain.

The ECCP recommends conducting thorough root-cause analyses and enhancing controls to address payroll control failures. They emphasize the need for internal controls, particularly in offshore payments, and suggest specific payroll controls to operationalize compliance programs effectively.

Other key aspects of payroll controls include segregation of duties, authorization and approval processes, security of assets, and review and reconciliation procedures. The ECCP urges CCOs to collaborate closely with payroll departments to understand their role in compliance and review existing controls to align with compliance goals.

The 2023 ECCP reflects a shift in compliance expectations, emphasizing the operationalization of compliance programs and the role of business units, particularly payroll, in ensuring compliance. It highlights the importance of following the money trail and leveraging payroll as a primary means of oversight and control in compliance efforts.

Daily Updates

Sign up for our free daily newsletter for the latest news and business legal developments.

Scroll to Top