Introduction to compliance

Businesses today operate in a highly regulated environment.  That means they are exposed to significant legal and financial risks, which must be managed professionally and appropriately to ensure the long term  viability of the organisation and the protection of stakeholders.

Compliance means "adhering to the requirements of laws, industry and organizational standards and codes, principles of good governance and accepted community and ethical standards." (Clause 1.3.3 AS 3806-2006).

Legislation frequently refers to due diligence or corporate culture as a factor in a defence against a charge or in setting penalties for breaches. Compliance is a key part of your due diligence system and corporate culture.

In order to manage compliance risks, AS 3806-2006 lists 12 Compliance Principles:


The principles supporting the compliance program that relate to commitment are as follows:

Principle 1: Commitment by the governing body and top management to effective compliance that permeates the whole organization.

Principle 2: The compliance policy is aligned to the organization’s strategy and business objectives, and is endorsed by the governing body.

Principle 3: Appropriate resources are allocated to develop, implement, maintain and improve the compliance program.

Principle 4: The objectives and strategy of the compliance program are endorsed by the governing body and top management.

Principle 5: Compliance obligations are identified and assessed.


The principles supporting the compliance program that relate to implementation are as follows:

Principle 6: Responsibility for compliant outcomes is clearly articulated and assigned.

Principle 7: Competence and training needs are identified and addressed to enable employees to fulfil their compliance obligations.

Principle 8: Behaviours that create and support compliance are encouraged and behaviours that compromise compliance are not tolerated.

Principle 9: Controls are in place to manage the identified compliance obligations and achieve desired behaviours.


The principles supporting the compliance program that relate to monitoring and measuring are as follows:

Principle 10: Performance of the compliance program is monitored, measured and reported.

Principle 11: The organization is able to demonstrate its compliance program through both documentation and practice.


The principle supporting the compliance program that relates to continual improvement is as follows:

Principle 12: The compliance program is regularly reviewed and continually improved.