You are one of the people responsible for ensuring that your company is compliant with regulatory requirements. You have the best compliance management solution in place. You are confident that your regulatory compliance library is updated with the latest changes in compliance requirements. Your compliance dashboard shows that all your units, including factories and warehouses in the remotest parts of India, are almost 100% compliant, and you are prepared for regulatory assessments.
You should be able to sleep well, right? Not really! As was evident when we, at Lexplosion (www.lexplosion.in), did independent regulatory assessments (also referred to as regulatory audits in the daily parlance) for a number of factories of a large chemicals manufacturer across the country. Because while it is one thing to be demonstrating compliance through a tool, ensuring that the on-ground reality matches with your dashboards is a whole different ballgame.
As we gear up for a year when Lexplosion is likely to conduct regulatory assessments for well over 100 manufacturing units, we wanted to share some of our key experiences in this series of blogs. We are going to cover the following topics in these blogs:
- Preparing for Regulatory Assessments – the business perspective
- Preparing for Regulatory Assessments – the regulatory assessor’s perspective
- What to look out for when you are on the field?
- Reviewing documents – the do’s and don’ts
So, without any further ado, let us dive straight in.
Preparing for Regulatory Assessments – the business perspective
From a business perspective, a compliance assessment can be considered as a challenge and an opportunity. Challenge, why? Because businesses need to align the teams towards the purpose of the assessment. Quite often those being assessed, for example, the factory manager and their team, consider the assessment an affront – the management questioning them. This needs to be sorted out early in the assessment cycle. An opportunity, why? Because it is a chance for the company to know about the gaps and strengthen internal processes. Assessments should not be considered as adverse but should be thought as a step towards improving compliance culture among teams and to ensure that teams know what they are doing and the implication of them not doing it accurately. We as assessors only want to assist businesses get their already well maintained houses in perfect order.
In this blog, we will explore the preparedness of businesses towards regulatory/compliance assessment.
Finalising the scope of the regulatory assessment:
Before initiating a compliance assessment, it is important to define the “what” and the “why” of the assessment. At Lexplosion, we encourage companies to ask themselves a few critical questions to clearly outline the scope of the assessment. Some of them are:
- How sure are they that the current compliance framework of the company adequate and up to date.
- Can they trust their systems with ensuring that all critical compliance requirements have been completed adequately and in a timely manner?
- Are they sure that their teams are fully aware of the latest compliance requirements and the documents that they need to file?
- Are they aware of potential penalties for non-compliance?
- How much penalty has actually been paid for missing critical compliances?
Answering these questions helps organizations identify the purpose of the assessment and determine the best approach to conduct it. There can be two approaches:
(i) Regulatory landscaping of compliances: A third-party regulatory assessor (“assessor”) can conduct a fresh regulatory landscaping of the selected units and identify the gaps in the existing set of compliances; or
(ii) Review of existing compliance framework: The third-party assessor can review the existing legal compliance framework of the company and identify the gaps.
The second approach only works well if the business in question is confident of their current compliance framework delivering them the right inputs required for being adequately compliant.
To further streamline the scope, organisations can decide on whether they want a comprehensive assessment of compliance requirements across all their business verticals/departments or focus on critical compliance requirements like registrations/approvals/authorisations, register maintenance, display requirements and regulatory filing requirements.
Defining the Assessment Period:
It is extremely crucial for companies to define a period of the assessment or what is commonly known as the “Audit Period / “Assessment Period” in regulatory parlance. Defining an such a period not just streamlines the assessment procedure for the assessors but for the internal team of the company undergoing the assessment as well.
Choosing the Mode of the Assessment:
At Lexplosion, we have seen that on-site assessments are often preferred for factory level compliance checks. These visits allow assessors to review physical aspects such as statutory displays, safety and hygiene processes, and general maintenance, alongside verifying documentation. On-site visits also foster better engagement, as assessors and factory teams can interact directly and clarify issues real time. Putting faces to names removes most misgivings that those being assessed might have about the assessors. Alternatively, remote (online) assessments can be an effective option, especially if the assessments need to be conducted within tight timelines and mostly involves reviewing documentary proofs of compliance. In this approach, documents are shared via a secured data room for the assessor’s review, which can save time and reduce logistical complexity particularly for multi-location businesses.
Ideally, what works best is a hybrid method, where the assessors first review documents for each factory/operating unit and then visit them for a closer review.
Centralized and Early Documentation:
Regardless of whether the assessment is on-site or remote, having a centralized data repository for all compliance documentation is essential. At Lexplosion, we prioritize reviewing documents before any site visits. This enables us to:
- Understand unique nuances that may require in-person discussions during the site visits
- Identify missing or incorrect documentation early
- Raise specific queries during the visit to ensure thorough compliance checks
For instance, if a unit mistakenly shares a Consent to Operate meant for a different business vertical, early review allows the assessor to flag and address this during the site visit, avoiding potential delays or missed issues.
Conclusion
With the right preparation, choosing the right mode of assessment as per their business requirement, companies can ensure these reviews are not just routine exercises, but catalysts for stronger, more resilient compliance frameworks.
In the next blog of this series, we will look at the same process through the lens of an assessor, by offering insights into how assessments are approached by them, so that businesses can be fully prepared for an assessment.
Lexplosion Solutions has been helping businesses across India get audit-ready through structured, on-ground regulatory assessments. Our team works closely with compliance, legal, and site teams to identify gaps, verify documentation, and ensure your processes reflect the compliance you report.
If you’re preparing for regulatory assessments, let’s talk. Get in touch
Stay tuned.
[1] From Lexplosion’s standpoint, the term regulatory audits is frequently used—both by us and our clients—to describe regulatory assessments conducted to evaluate compliance with applicable laws and regulations. It is important to clarify that when we use this term, we are not referring to audits that are expressly required under Indian statutory frameworks, such as tax audits under the Income Tax Act, secretarial audits under the Companies Act, or any other legally mandated audits. Instead, our usage pertains to broader compliance checks or reviews initiated either internally or externally to assess an organisation’s adherence to regulatory obligations.
Written by: Baishali Chakraborty
Disclaimer
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