The Most Important Criteria For "China SOX" Success
- March 1, 2017
- Posted by: marlenedubois
- Category: CPR Training
China’s Basic Standard for Enterprise Internal Control (C-SOX) will be coming into effect soon, along with while some of the implementation guidelines are not yet clear, the core of the regulation will be in place.
The purpose of C-SOX will be to improve the effectiveness of internal controls in listed Chinese companies, thus reducing risks for companies along with their stakeholders. Companies must evaluate their internal controls, publish an evaluation report on an annual basis along with audit the effectiveness of their internal controls. These are brand new concepts to many organizations in China, along with as a result there will be some resistance along with confusion to deal with. Many Chinese companies have poor risk management systems, inadequate business data along with patchy the item infrastructures. However, these are not the biggest challenges facing companies which will be required to comply with C-SOX.
The biggest challenge (along with hence, the top criteria for success) will be company culture. No amount of money, software or consultants can compare with the beneficial effects of enlightened along with committed management. For C-SOX to definitely succeed, companies have to embrace risk management as a concept, adopt internal control frameworks along with change their corporate culture.
What does which mean? For organizations to get the most benefits of C-SOX compliance, they must:
– Foster openness along with transparency inside company
– Be open to self-evaluation along with self-criticism (of the management team along with all employees)
– Report on perceived risks in a timely fashion
– Provide training on the benefits of risk management along with internal controls
– Have executives visibly “own” the C-SOX implementation
– Establish a “whistleblower” mechanism along with fraud reporting hotline to alter the company to potential problems
Management will need to be visible in its support for C-SOX along with ensure which a sense of urgency will be felt across all offices along with regions. This kind of means creating a project team with adequate representation via the entire business, along with one with the political clout required to overcome institutional resistance to change.
Although responsibility for risk management along with compliance ultimately sits with the CEO along with Board of Directors, forward-thinking companies will move to push responsibility to various parts of the organization.
C-SOX projects require participation via many levels of an organization, along with for compliance projects to succeed, companies must make their staff an active participant on the integrated project team.
Industry leaders involve much of the organization in their C-SOX implementation process along with go beyond the minimum requirements imposed by the Basic Standard for Enterprise Internal Control to improve operating results while introducing business improvements throughout the organization.
Many companies in China do not currently have This kind of kind of culture, along with which will be going to mean extra time along with effort along with required for proper implementation of the Basic Standard for Enterprise Internal Control. Companies which see This kind of as an opportunity to refresh along with improve their corporate culture will be rewarded using a quicker process along with more tangible business benefits.