Compliance procedures – transitional fashion or effective method for risk limitation in company?

By, Urszula Płusa-Szpadzik, tax advisor, manager in Accreo Sp z o.o.

The institution of compliance (referred to the procedure, system), which aim is to protect the company against negative consequences related to the conducted business, is becoming more and more popular among the management of the companies and tax advisors.

Nowadays the word „risk” is very popular among board members, financial directors or chief accountants. Entrepreneurs complain, that instead of performing their business, they have to protect themselves, and their companies against potential tax controls, sanctions, proceedings initiated by public authorities.

The compliance system helps reducing this risk and allow entrepreneurs to manage smoothly its company. The purpose of imposing compliance procedures is primarily to prevent company’s from financial and image losses, but also to protect against criminal and administrative liability. Compliance is a way of organizing information that minimizes the occurrence of irregularities ("Compliance in the enterprise", Bartosz Makowicz, Wolters Kluwer Polska, 2011).

Although the development of appropriate mechanisms and procedures at the beginning islabor-intensive and requires the involvement of a large number of employees. However, it should be realized that the time spent on developing an appropriate, individual approach that will actually work in a given enterprise will pay off in the future with the company's security. An entity operating under specific procedures will respond faster to raised irregularities (whether within legal provisions, internal regulations or accepted standards of conduct).

An unreliable contractor, an attempt to use the entity for money laundering, mobbing are the issues when properly implemented procedures should work and detect irregularities enough early. However, not only such seemingly distant issues may arise in the enterprise. The correct application of TP, MDR reporting or verification of the real beneficiary of receivables paid abroad may not only be difficult to implement, but even brings risks (in the form of financial sanctions, risk of fiscal criminal liability).

In its practice, Accreo supports companies in implementing legal and tax compliance. Within the legal compliance, organizations are introducing:

  • AML procedures (in scope of anti-money laundering);

  • Corporate governance and order in the scope of Code of Commercial Companies;

  • A code of good practice;

  • RODO;

  • Labor law;

On the other hand, in order to properly settle and comply with tax regulations, which nowadays are becoming more and more complex, taxpayers implement:

  • Mandatory Disclosure Rules (MDR) procedures;

  • Transfer prices (TP) procedures;

  • Verification of contractors;

  • Due diligence policy at Withholding Tax (WHT);

  • Car fleet regulations/procedures;

The Accreo support process itself, which begins with a meeting with people interested in implementation of procedures (both from the point of view of performed functions in the structure, as well as due to the potential possibility of personal responsibility for the organization's activities). At the meeting, we discuss the purpose and scope of the process, our experts not only familiarize themselves with the organizational structure, but also present the so-called matrices of responsibility.

Futhermore, together with designated employees, we prepare procedures, implement them and conduct technical meetings and trainings, which are primarily to make employees aware of the scope of responsibility, but also the advisability of introduced changes.

The procedures themselves consist of a detailed description of individual patterns of action, an indication of the role of particular persons and practical way of implementing such a procedure. The procedures are accompanied by documents intended to facilitate the implementation of procedures (such check lists, manuals, paths for professional employees who may be in situation generating certain obligations).

However, the implementation of procedures cannot be the last stage of protective measures introduction. At this point we finally get to the most important stage – its application. The preparation of a number of regulations and guidelines, only to be "put on the shelf" in the event of a eventual control, misses the purpose of the compliance system at itself. Our intention is to convince entrepreneurs and their employees to actually use and follow such procedures, because only at that moment it implementation makes sense.

Therefore, answering the question raised at the beginning of the article, it should be stated that indeed the compliance system is becoming more and more popular, and entrepreneurs who are aware of the risks, want to introduce it in their enterprises. However, only the actual behaviour in the line of model individually tailored to the specifics of the company can really reduce the risks that the entrepreneur must face today.

Keywords Accreo