The most important regulation in regard to corporate compliance in the US is the Sarbanes-Oxley Act which defines considerable tighter personal accountability of corporate senior executives for the accuracy and preciseness of reported fiscal statements of a given financial year.
Riordan Manufacturing Company was founded in 1991 as an international plastics manufacturer, doling out polymers into durable plastic substrates (Carbajal, 2009). The firm employs nearly five hundred people in each of its global branches and plants. It is currently regarded as a leading firm in the plastics sector when it comes to addressing the changing customer needs.
Riordan Manufacturing has a strong clientele niche serving the auto part aircraft manufacturers, appliance manufacturers, bottlers beverage makers, the US Defense Department, among others. This strong market niche is attributed to several aspects such as adoption of innovative manufacturing styles, compliance to ISO 9000 quality standards, and proper customer care service.
The primary objective of this essay is to look into various aspects of corporate compliance with regard to the Riordans Plastic Manufacturing Company. Some of the aspects highlighted in the context of this essay include legal principles of business management, managing legal liabilities of the companys officers and directors, governance, risk management and enterprise product liabilities. Some aspects revolving around tangible and intellectual property, international law, and legal forms of business will be briefly discussed.
Corporate Compliance
In general terms, corporate compliance means conforming to stated requirements at and standards at the organizational level. At corporate level, compliance may be achieved through adoption of management processes that clearly identify the needed requirements (Trent, 2008). Some of the applicable requirements may be described by the laws, contracts, regulations, policies and strategies, etc. The management practices adopted should be in position to assess the level of compliance, review the risks in reference to the associated costs and expenses that may result from non-compliance.
The management practice should therefore prioritize, finance and implement any corrective measures where appropriate. Regulatory compliance is defined as the goal that public agencies and corporations aspire to conform to in their attempt to ensure that the personnel are made aware of the relevant regulations and rules. Through this, the management ensures that their staffs take precautionary compliance steps for organizational success (Trent, 2008)
The senior management team of Riordan Manufacturing introduced a Corporate Compliance Strategy specifically intended for plastic designs. The business practices of the firm are governed by ethical standards and general employee expectations (Carbajal, 2009). This plan therefore makes it possible for the administration to maintain its leadership integrity and promote a working environment that ensures compliance is above reproach.
The firms compliance plan clearly states its mission, which generally is to ensure knowledge and conformity to applicable laws, regulations and rules to the labor force, including state and federal programs, waste, fraud, ethics, abuse, security and privacy requirements and general governance.
Legal Principles of business management
There are many principles involved in business management. Those common to almost all forms of business include division of work, whereby the scope and nature of work in staffing and managerial parts is clearly distinguished and standardized. Another aspect is on the responsibility and authority. The allocation of work in most cases is characterized by certain levels of accountability and authority. This ensures that those assigned specific tasks have the confidence in carrying out their assignment.
Another common legal business principle is the use of discipline. Reasonable methods are applied in controlling the general behavior of the Riordan officers with an intention of improving efficiency by minimizing negligence and ignorance of calls to duty and accountability. With proper discipline procedures clearly outlined and made aware to the employees regarding the nature of punishment dispensable for any infringement on the corporate compliance plan, the officers or employees of the firm will end up fulfilling the requirements of the plan due to the fear of associated repercussions ( HYPERLINK httpwww.ussc.govorguide.htm httpwww.ussc.govorguide.htm ).
The legal forms of business management in the United States require compliance and total conformity to defined regulations and laws. Infringement of these laws may have a serious civil or criminal penalty imposed on the individual violator or the whole corporate body where the laws are being collectively violated. Guidelines on the cause of action to be taken or on the nature of punishment to be allocated have been clearly explained in Chapter eight of the sentencing principles as provided by the U. S. Federal Sentencing Commission ( HYPERLINK httpwww.ussc.govorgguide.htm httpwww.ussc.govorgguide.htm )
Managing Legal Liabilities of Riordan officers and directors
The Code of Ethics and Business Conduct is aimed at providing guidelines to the Riordan directors, employees and executive officers. These guidelines may include the general organizational ethical prospects and also provide help in the management of legal liabilities (Carbajal, 2009). Based on COSO requirements, the control environment is meant for controlling the individual perception of employees within a given organization. The COSO requirements play a critical role in guaranteeing high quality in Riordans operations (Butod, 2009).
Riordans officers and directors are fully answerable to the firms operations concerning various issues such as authorizations and approvals of specific operating performance aimed at boosting the firms competitiveness. This implies that any such activities e.g. coercion, manipulation, falsified influencing of various activities within the firm (e.g. financial statements) for personal gain are regarded unlawful. The management of legal liabilities of Riordans directors and officers therefore requires that all control strategies for instance asset segregation should not be liable to any forms of manipulation (COSO, 2004).
The Sarbanes-Oxley Act recommends that the directors and officers found manipulating the financial statements of the company for their own selfish interests would be criminally and civilly answerable for their actions. In addition, the law allows an internal counsel within the firm to report any activities carried out by the firm, on condition that the actions go against the public policy (Butod, 2009).
Governance
This defines the general management approach adopted by Riordans administration in their daily operations. It involves a combination of hierarchical management strategies coupled with management information systems. All the aspects entailed in governance are meant to ensure accuracy, completeness, and timeliness of all important management information accessible to the senior management team. These governance elements are aimed at ensuring proper decision making, adoption of best management practices and effective and systematic implementation of instructions and directions from Riordans executives (COSO, 2004).
In order to meet the required levels of governance as stipulated by COSO, Riordan Manufacturing Company together with other business organizations initiated the re-launch of a government website ( HYPERLINK httpwww.business.gov httpwww.business.gov ) which provides a central point of reach to information and other government services that may help the company to adhere to established government regulations.
For effective governance within Riordan Manufacturing Company, compliance data or any other relevantassociated information concerning the business in the broad perspective of corporate compliance should be made available to the organizations governance officers at all times. This data is useful in the validation or implementation of the firms overall compliance plan using an accurate, complete and consistent approach.
Alternative Dispute Resolution strategies
Instead of the usual court processes filed by other parties involved in the dispute, the Corporate Compliance Plan has put in place an Alternative Dispute Resolution mechanism to act as a defense counsel to the issues affecting Riordan Manufacturing Company. The ADR in this case plays several roles including mediation whereby it assesses and evaluates the specific interests of the conflicting parties. Employees of the firm may also utilize peer review and mediation to resolve disputes between themselves and the firm (Carbajal, 2009).
Alternatively, Riordans workers and employees have the option of accessing the Ombudsman to file any cases of crime, wrongdoings and crime in an anonymous manner. The workers who may feel dissatisfied with the mode or pace of dispute resolution at departmental level within the organization may report their grievances to the human resource section for further guidance and instructions on their cases. To completely cater for their varying needs, the Riordan officers and employees are allowed to choose arbitrators in their cases and also be given the same period for submitting their claims as provided for under the statues (COSO, 2004).
Riordans resolution strategies in governance are that any individual or individuals who go against the requirements of the Corporate Compliance Plan are liable to disciplinary actions. Common forms of disciplinary actions adopted by the company include written and verbal warnings, termination or suspension. The nature of discipline highly depends on the magnitude of the infringement or violation. This governance policy has been made clear to all Riordans officers so as to enable the employees to fully adhere to the corporate compliance plan and in turn lead to increased productivity.
Enterprise Risk Management based on COSO
The general objective of the corporate compliance plan is to define the significance of in-house controls and suggest possible steps that may be adopted in order to mitigate enterprise risks by application of the broad based recommendations and principles based on the Committee of Sponsoring Organization of the Treadway Commission- COSO. Risks can be seen in either internal or external environments (Butod, 2009).
From this perspective, the law requires that any company carries out a risk assessment.
General enterprise risk management comprises of a set of defined processes and procedures through which Riordans administration identifies, evaluates and to some extent respond appropriately to counter the risks that may hamper the realization of the firms business goals. Enterprise risk management is greatly dependent on their apparent gravity, and entails avoiding, controlling, and accommodating or shifting the risks to an intermediary or a third party.
Some of the risks encountered in enterprise management include information security, financialcommercial risks, technological risks etc. In some scenarios, external regulatory and legal compliance risks also pose a serious challenge to risk management (Carbajal, 2009).
The first step in carrying out a risk assessment is to identify Riordans control objectives then followed by establishing the general requirements. From this step, priorities in order of urgency are listed before an appropriate action is taken. In most cases, proper identification of the risks involved in the general operations is the appropriate course of action taken. This follows the actual verification of the nature and probability of the identified risks occurring.
International law
Based on the fact that Riordan Manufacturing Company is a global organization, it has to abide by the international laws governing various business forms in different countries. Presently, the main challenge faced by the firm is on its international relations with Asian countries such as China. According to analysts, the company is believed to be outgrowing its current location, Hangzhou and is contemplating relocation to Shanghai so as to cut down on shipping costs (Jennings, 2006).
Today, Riordan Manufacturing Company incurs many shipping costs in transportingshipping its products from Hangzhou to Shanghai. Shanghai is regarded as an international port and thus the only exit point for Riordans China products to the world markets. To counter this problem, Riordan has to agree with the Chinese government in order to enable the company to shift its operations from Hangzhou to Shanghai (Jennings, 2006).
Tangible and intellectual property
Intellectual property is a legal definition of commercially feasible products, inventions, ideas, and artistic works derived from ones individual mental processes. Intellectual property is duly protected by legal frameworks which may be in form of trademark registrations, copyrights and patents. Tangible property on the other hand is the physical aspect of the creative idea(s) also protected by law (Pollick, 2010).
In most cases, intellectual property is treated or handled in a manner similar to the mode of treatment given to other physical andor tangible products. By way of example, Riordan Manufacturing Company legally owns several factories and plants across the globe ranging from the United States, Europe and down to Asia. Riordans intellectual property rights may be clearly portrayed in their secret laboratory procedures for manufacturing plastics with specific strengths, elasticity and durability.
The formulas, lab procedures and exact chemical compositions used in the manufacture and processing of Riordans products are protected by trade secret registration. Other plastic manufacturing companies may also make products with similar properties but may not be exact in composition due to the protection guaranteed by the tangible and intellectual property rights.
Not all creative or innovative ideas qualify being regarded as tangible or intellectual property. The main factor put into consideration in this case is the commercial feasibility of the ideas or inventions which may require protection or prevention of ideological theft. Such measures are regarded as copyright infringements (Pollick, 2010). Without an appropriate patent of inventions and ideas, other firms or Riordans competitors would be better placed to legally develop improved or similar versions of the companys products without fear of penalty.
Tangible and intellectual property rights may not necessarily belong to originators of the ideas. Dr. Riordan, the founder of Riordan Manufacturing Company is believed to have invented the formulas used in the manufacture of plastics and allowed his company to own the intellectual property of the chemical formula and the tangible property of the resulting products.
Legal forms of business
Business compliance management process is an area of study related to the co-ordination of corporate compliance structures and process management. A corporate compliance strategy is an organizational tool that intertwines all the necessary legal forms of business. This plan links the business and legislative rules to Riordans processes and policies. The primary aim of introducing a legal form of business is to encourage a high level of self sustenance and optimization so as to minimize business losses associated to internal misappropriations or breaches of laws.
Compliance and other legal forms of business may be analyzed using the general analogy of an accounting system whereby individual processes are regarded as serious business transactions. In this perspective, each process and action taken may be subjected to serious scrutiny before making valuations of benefits and costing associated to each process or task. To get a clear image of Riordan Manufacturing current state of affairs, both low and high order transactional histories and policy creation of individual tasks should be put into consideration.
Enterprise and Product Liabilities
Riordan Manufacturing Company deals with a wide range of plastic products developed for use by many industries. The research and development corporate section of the organization comprises of five expatriate sections in the development of medical related products such as medical gadgets, heart valves, and associated instrumentation. The major liability in this case may arise from final product defects in this very sensitive domain. In case of an error, the company takes adequate steps to correct the defect (Butod, 2009).
Any defect arising in the Research and Development department is rated as the most costly shortcoming to the enterprise because the products in this case touch directly on the health and life of the customers.
The Corporate Compliance plan introduced by Riordan Manufacturing is specifically intended to govern the firms business and ethical practices to meet the general employee expectations and international requirements. This plan therefore makes it possible for the administration to maintain its leadership integrity and promote a working environment that ensures compliance is above reproach.
However, the firms faces various challenges in the implementation of this compliance plan. Some of the challenges may result from sabotage by employees who resist change due to personal fears of their job securities. Precautionary measures that put into consideration the contentious and sensitive aspects of employee relations should be put in place when enforcing the plan.
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