Compliance

Compliance has become prevalent worldwide and especially following the passage of various national regulations such as the United States’ Sarbanes–Oxley Act, Australia’s Corporate Law Economic Reform Program Act, and the UK Bribery Act. The cost of business misconduct has been so great to business, shareholders, and the public in general that organizations are being held to a duty to prevent offenses before they even occur. Governments around the world increasingly require organizations to implement internal responsibility, accountability, and risk management mechanisms to prevent wrongdoing. This has resulted in the institutionalization of compliance as a core function within organizations. This entry aims at defining compliance and its relationship with business ethics and corporate social responsibility (CSR). It will argue that compliance is not a legal discipline, but a multidisciplinary field. Compliance departs from legal requirements to include internal regulations, formalized ethical principles, and voluntary commitments. Compliance is not synonymous with law, business ethics and CSR, but the outcome of their effective implementation.