People
have an innate ability to notice the irregular, to spot what is wrong, and to
perceive what is out of order. A misspelled word, a mispronounced name, a stain
on a white shirt – these never go unnoticed. In fact, some people are so
skilled at pointing out mistakes that they even made it their life-long
profession, browsing through records to identify exceptions. However, a
profession with an oversight function requires more than spontaneous remarks on
the incorrect. It demands the observance of a systematic process of examination
that involves preparation, execution, and proposition. For a compliance
officer, this process is core to the conduct of compliance testing.

 

Compliance
testing is essential for an institution to continue thriving. In addition to meeting regulatory expectations, ensuring that policies
and procedures are properly implemented and strictly observed by the business
units is paramount in the management of compliance risks. Addressing the root cause of any identified
compliance issue prevents the possibility of being imposed with penalties and
fines; these directly impact an institution’s capitalization. Hence, the
conduct of compliance testing must be handled carefully and systematically to yield
an accurate representation of an institution’s actual status of compliance.

 

The
compliance testing process begins with initial planning. The compliance testing
team gathers information about the business unit’s operations, facilitates the
generation of various reports, samples accounts and prepares the needed materials.
It is necessary that all records, documents, and materials are secured prior to
departure.

 

Next,
the team does fieldwork for the conduct of interview and review of records
exclusively maintained in the business unit. Compliance examiners validate the
personnel’s knowledge of the policies during the interview and determine
whether this translates to actual results. They identify the cause of issues
and propose corrective actions to sufficiently address the same. All documented
findings and observations are discussed with the business unit during the exit
conference.

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Finally, compliance testing results are drafted, reviewed and reported to the board
committee for the approval of the recommended courses of actions.

 

As
they are expected to produce reliable results for the governance of an
institution, compliance examiners must never stop at revealing mistakes. After
all, it is more than mere nitpicking.  

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