ASSESSMENT TASK 1

COMPLIANCE SYSTEM REPORT

Introduction
Each segment deals with the latest practices, issues and implications of the Charity Treatment, the
compliance management system of a non-profit agency. There are a lot of problems during the audit
process. The study deals with the internal and external regulation, along with the workplace compliance
requirements. The key areas concerned, risk, penalties and risk minimization strategy.

Requirements Necessary for Compliance & Its Effects

Compliance Requirement (External)
Policy bodies usually authorize the terms of external compliance for the purpose of performing business
operations legally. External requirements require the preparation and maintenance of annual statements,
rules, and compliance with standards such as job health and safety policies, equal working conditions,
budget policies, financial management policies, sexual harassment policies, risk management policies,
and privacy policies. Besides that, shareholder and stakeholder records are required to be maintained by
the firm. Therefore it is necessary to formulate cyber-security laws and regulations to protect information
and data from hacking and unauthorized use. Most significantly, the charity care must adhere to the
criteria set by the Australian Charities and Not-for-Profits Committee.

Compliance Requirement (Internal)

Given that the company is classified under the Companies Act of 2001, it will conform strictly to any
internal requirements. These include setting up boards of directors, conducting annual meetings of
directors, creating corporate rules, updating by-laws, maintaining a clear flow of information, proper data
entry of assets, and keeping a well-kept record of the company's stock purchases, payments obtained and
bill disbursements, and properties. In addition, the company is expected to protect its properties and
record book from potential fraud and theft. External criteria will ensure that the Charity Care functions
properly, without much trouble. The legislative enforcement requirements that also control aspects of
operations and events, such as sales and inventory management.

Compliance Requirement (Industry Specific)

Charity Care, as a charity and not-for-profit organization, must have specific industry-specific compliance
criteria. Which include keeping financial records, protecting organization’s information, registering as per
State Nonprofit Requirement, Fundraise Certificate, tax filing papers, etc. Furthermore, the organization
is required to maintain a well-kept record of received expenditure grants, prior tax filling, bank
statements, donor records, unpaid expenditure, items of incorporation, etc. Furthermore the board of
directors of the organization will meet at the end of each term. Failure to meet the above conditions will
place penalties on the organization for non-compliance including loss of tax-exempt status of the
organization.

Areas Effected
Many areas would be affected by the enforcement criteria. Of example, all the paper works related to
corporate spending, tax filling, salaries, bank statements, and other financial records must be handled by
the finance and accounting department. Therefore one of those regions would significantly impact the
compliance management system. Furthermore, in accordance with government regulations and
guidelines, the human resources department and the legal department of the company are required to
monitor all policies, regulatory obligations and resource planning. Furthermore, staff training is expected
to be carried out on a regular basis. This has been found that abuse of funds has been identified for the
treatment of charities. It is one of the biggest issues of HRM. Tax filling was not performed correctly and
timely, either. A well-functioning compliance management system would ensure that the functions of all
departments concerned are fulfilled in a defined and transparent way.

Risk
There are different types of risks associated with noncompliance. These can also be identified as follows:

 Financial risk-Low compliance can also cause financial problems for the company. Investors and
fund managers may lose trust in the organization and, in the worst case, may also discontinue the
charity care funding.

 Legal danger- Lack of compliance with the standards and regulations could bring legal action
against the organization. This may also result in fines, arrests, debarment or incarceration.

 Reputational harm-Failure to comply could hurt the organization's reputation. This can be
attributed to fake news, lack of market interest, social media discourse, low morale in the
workplace etc.

 Business risk- If Charity Care cannot meet the standards for non-profit organizations,
specifications, laws and guidelines set by the Australian Charities and Not-for-Profits
Commission, then its activities will be shut down.

Potential Penalties
Throughout Australia, each charity organization must be registered with ACNC and be in accordance
with the ACNC Act 2012 requirements and obligations. Failure to comply would result in penalties, such
as canceling licenses, fines, and jail sentences. Any charity that fails to meet the specifics of the annual
declaration must pay the fine.

Reducing Risks
The non-compliance risks can be managed and reduced through the implementation of a sound risk
management plan. These are as follows:

 Assessment of Risks
 Evaluation of required actions
 Regular Monitoring and Assessment
 Establishment of risk policy
 Identification of Risks

A System for Compliance

 Cloud-based compliance management application- Cloud-based platform includes all of the tools
and services available to manage internal compliance criteria. This will provide shared work
space for multiple stakeholders and allow them to be a part of the firm's compliance management.
This will store, maintain and provide internal standards and information on the regulation. It also
facilitates a connection between the risks, processes and internal controls of the businesses. It
 ensures consistency between the information presented in the automatically generated records,
enabling managers to verify existing compliance levels.

 Continuous audit-based compliance management- The system for compliance management is

suitable for both internal and external uses. Besides this, the model could be best suited to the
charities by size and operations. In this model, there are five steps that will fulfill the charity’s
goals and address the compliance concerns current and future. The first stage concerns the
assessment, assessment and management of risks. It will encompass all risks associated with
organization, credibility, environment, and governance. This will also help to set a risk exposure
profile so managers are aware of the level of risk.

Systems Comparison
System Cost Effectiveness Efficiency Feasibility Match
Cloud-based $ 15,000 Effective only This is only Regardless of The current
compliance for internal efficient for financial organizational
management requirements the concerns, that culture uses
management management would be less manual
but can of internal feasible for processes and
provide enforcement Charity Care. simple
information to criteria Additionally computer
all staff may need systems to
stakeholders some perform most
anywhere preparation to of the
do so functions. That
would take
some time to
implement
cloud
computing
Continuous $ 8,000- Effective for This is useful This is highly This works in
Audit-Based 9,000 internal as well for handling feasible from line with the
Compliance as external enforcement areas of existing culture
Management compliance requirements financing as of
management. both internal well as from organisation.
In addition, it and external current
can handle the organizational
risk adequately environment

System to Be Recommended
From the above comparison it is fairly obvious that continuous audit-based compliance reporting is best
suited for Charity Care. The organization currently faces issues related to internal as well as external
regulatory requirements. Charity Care therefore wants a plan which could resolve these organizational
issues. The suggested tool has the ability to do so. The five stages of the model are risk policy setting, risk
recognition, risk assessment, proper behavior assessment and frequent monitoring and assessment.
Managing all the relevant compliance concerns and challenges that the company faces may be helpful.

Closing Thought
The general compliance criteria of Charity Care were defined in the following section, in which
requirements for internal and external compliance were identified. Furthermore, the consequences of
enforcement problems were also highlighted and the company was also addressing how they could be
reduced. Ultimately, the required implementation system was adopted according to the need of the
company and its culture. The suggested software is a continuous audit-focused monitoring of compliance,
due to its ability to resolve internal and external enforcement concerns.

ASSESSMENT TASK 2

Management System for Compliance

Management Information System Requirement- The management system criteria is specified in this
section, with an overview of the main issues and proposed CMS. These will include:

 Environment Recognition
 Team setup
 Understanding Objectives
 Modular Investigation and Decomposition
 Requirement Analysis and Review
 Integration of Documentation

Components of Proposed CMS- As per the regulatory guidance, the components of the proposed system
are given below:
 Management Oversight and Board of Directors
 A compliance program
 Specifications of Each Component

As per the regulatory guidance, the components of the proposed system are given below:

Management Oversight and Board of Directors: It is required from the proposed CMS that communicate
the organizational goals, adopt relevant steps and policies, and define staff compliance function

A compliance program: It is a well-written program that include the following component:

 Procedures and Policies
 Training
 Monitoring
 Stakeholders’ complaint and query response

Regarding Personnel

 As per the issues found in the case, some employees are required by the organization to handle
problems and implement the proposed CMS model. The issues include accounting, control over
inventories, tax payments and resource planning.

 The needed staff includes the CEO, the payroll clerk, the bookkeeper and the business manager.
  Proper implementation of the new plan is important to resolve the problems relevant to the
Charity care compliance program. To this end, the selected staff are required to adequately
perform their assigned duties.

 CEO- The CEO is the head of the compliance cell for the effective execution of the company's
procedures and effective contact.

 Payroll clerk- He is responsible for reporting all of the pay and compensation related mistakes to
the higher authority or to the compliance cell.

 Bookkeeper-This is the duty of the bookkeeper to maintain all records related to payments and
properties. Besides that the bookkeeper all bank Statements must be reviewed.

 Business manager-It is the business manager's responsibility to provide the subordinates with
instruction on the planned program.

Regarding Training
Compliance education is relevant as it helps strengthen current business processes and is mandated by
statute, legislation and policy. This educates the staff about policies and regulations applicable to the
industry. The company needs to include financial and fund management instruction, budget planning,
ethical instruction, and diversity management according to the issues that have been identified.

For Charity Treatment the correct training choices are as follows:

 Diversity training
 Human resource regulations
 Information Security Procedure Training
 Workplace health and safety training
 Anti-harassment Training
 Financial regulation training
 Resource management training

Processes

 A complaint management system is needed to monitor and address complaints from the
Company. The Charity Care would raise its sales and its funding if properly controlled.
 These steps may contribute to the development of a compliance management culture
 The process of detecting enforcement infringements is very important and can be achieved by
encouraging and educating workers to expect some kind of infringement, and reporting to the
directly involved manager or superior authority. Any responsible and practical steps should be
taken to resolve the infringement.
 The reporting process on violation of compliance can be started at any point. At the lower level
the director can report it to the manager, the manager can report it to the supervisors, and the
executives can report it to the board. The internal audit department could also be reporting serious
breaches.
 Internal liasoning of an organization is important for the establishment and coordination within an
organization of its activities and resource management. This can be achieved through introduction
of an ERP programme. On the other hand, external liasoning is required to establish a system of
interaction within the company with the outside and other stakeholders.
  The performance metrics contain many breaches, which is the amount of cumulative enforcement
violations a company has made, in specific time. Besides this, another parameter is payroll error
which is related to paying employees’ salaries and wages.

Administration

Note: Considering the total budget for CMS implementation is $ 8,500

Particular Budget
Human resource for CMS $ 2,000
CMS implementation $ 2,000
Reviewing CMS $ 2,000
Maintenance of CMS $ 2,500
Total $ 8,500

ASSESSMENT TASK 3

Executive Summary
The Plan for implementing the proposed compliance system was addressed in the section below. The
following approach has 4 stages for each step, and is important. Moreover, a tracking mechanism for
maintaining. There was also talk of an eye on the process. Furthermore, the program also focused on the
intended tests and results.

System Establishment
The compliance risk management model includes four phases of the process to identify the associated
threats and challenges and resolve them. It includes economical, reputational, organizational and legal
risks. The Charity Care model has been adapted to match better with its operations. The conceptual
structure has other goals. The following are:

 Identify, identify and handle the risks associated with the organizational goals.
 Manage operational procedural risks.
 To build an organization’s risk exposure profile.

The system is to be implemented through the four stages as follows:

Stage 1- As has been discussed in previous sections, Charity Care now faces issues related to the process
of compliance management currently being introduced within the company. This can be done with the aid
of an efficient strategy of compliance risk management that ensures the charity is fit for purpose. Since
Charity Care collects money and has a stable fund, financial risks may not be large but they are still
present. Therefore, compliance risk control must clearly define the risk tolerance of the organization. All
this will assist the trustee and managers in setting the benchmark for each phase and procedure.

Stage 2- From the evaluation and audit process it was concluded that Charity Care has problems with the
transparency of purchasing spare parts that contradicts the financial policy of the company. Despite this,
there was no evidence of any purchases made from the organization's account, suggesting insufficient
record keeping and reporting. There were also missing laptops inside the organization which indicate
possible fraud. In fact, there were several concerns with the company's existing tax filing process.
Identifying the challenges, administrators and executives, they will stay loyal to the organization. For
better results it is important to explain the lower subordinates in compliance management about their
parts.

Stage 3- Risk and problem detection must be done with due regard to their possible effects and their
likely occurrence. Risk evaluation and categorization also aid in classifying and arranging them so that
the appropriate steps can be planned. To this end, one method is to evaluate each identified risk and its
occurrence, along with the extent of the risk effects. This will help map risks as a by-product of the
possibility of an unexpected outcome and its impact on the ability of the organization to attain its goals
and objectives. Charity Care is required to map and rate the risks by their effect and probability of
occurrence. To minimize the problem a strong focus should be put on high-impact risk.

Stage 4- Once charity care compliance problems are found, the administrators may need to ensure that
appropriate action is taken to mitigate its impact. This includes a thorough review of internal controls.
Looking at the issues relating to charity care, we can plan the following actions:

 Creation of a prosecution unit to be responsible for the legal and corporate Charity Care offence.
 Process controls such as organizational rules, internal financial controls, etc. will reduce the risks.
 Check the procedure periodically to minimize the high risk of impact.

Methodology for Monitoring

Compliance management program proposed is motivated by a continuous enhancement capability.
This is a dynamic model that ensures the tackling of new risks as soon as possible. There are certain
compliance monitoring aspects inside a charity organization.
Including:

 Ensuring the identification, assessment and elimination of future risks helps to attain the
organizational objectives of Charity Care.
 Ensure that the evaluation process complies with the appropriate risk requirements of the
manager.
 Assessment of financial compliance factors as part of budget preparedness and control.
 Hold intermediate phase reports checked regularly and suggest changes periodically.

Result/ Analysis
Through the proposed compliance management system and effective monitoring it is clear that the threats
can be substantially reduced. Maintaining day-to-day oversight of financial bills and procedures can help
strengthen transparency between management and stakeholders. This would also help in overcoming the
issues of record keeping. This will also help in successful preparation of the program.

Closing Thoughts
This article discussed the creation of the system. The four phases were elaborated solely in the Charity
Care sense. Besides this, the methodology of monitoring was also developed, and the findings and
analysis were also discussed.