In compliance, there are three lines of defense:
1. Business itself: the first responsibility lies with the employees, tracking and following relevant laws and current legislation, ensuring all operations run in a compliant fashion.
2. Compliance function: the second line of defense is guidance and oversight by the compliance team, updating the law library with its associated risks and controls, changing business policies, and performing periodic checks and audits.
3. The auditors: the third line of defense are the external and internal auditors who independently check all compliance risks and controls in order to report findings to the Board.
The second line of defense is the centripetal force that keeps the first and the last in check, thus asking the compliance function to grapple with many variables on a daily basis. In the meantime, the compliance requirements list is growing exponentially with new markets, new products, and new features, while governments continue to issue new regulations and fines at an accelerated rate.
It might have been a matter of keeping a well-rounded excel spreadsheet just ten years ago, but today’s regulations change so often that it’s never a one-and-done.
With compliance statutes and regulations in constant flux due to the growing consumer protection legislation, it’s critical to quickly discern and understand what new laws or amendments to the existing law impact your organization today, or in the near future.
Following the legislative drafting process is essential to having a comprehensive and proactive compliance program. This is why we’ve put together an easy-to-read guide that explains the common terms and parts of a law you need to read and understand, without spending too much time, to determine if there is an impact on your company’s compliance regimen.
Quick Tips for Reading and Understanding a Statute
Bills (i.e., proposals to make a new law, or proposals to change existing laws) are read in the context of existing statutes. Consequently, with a good understanding of how to read the statutes, you will be better prepared to read and understand a bill.
Many statutes are straightforward and easily understood, while others provide exceptions to an application of the statute that can make the meaning difficult to follow. Below are a few tips to help understand statutes.
Tip 1: Read the heading. The heading of a statute generally contains a brief statement indicating what the law contains and its purpose. While most statutes follow a common pattern of title, subtitle, chapter, subchapter, and section, they may also be divided into articles, parts, and subparts. Reading the complete heading will give context to how a section fits into the overall statute.
Tip 2: Check the context. Think of it as a unit of law that is part of a series and scan the table of contents to see what sections come immediately before and after the initially targeted law. If there is a short title section (usually at the beginning of the chapter or subchapter), this may give an alias or common reference for further research purposes.
Tip 3: Look for a definitions section. If there is a definitions section, it is usually found at the beginning of a chapter or subchapter. A definition may be needed in the statutes to replace long terms with shorter versions, for example, using the term “department” to refer to the Department of State Health Services. It is important to understand references to general terms like “department,” “agency,” or “executive director.”
Image source: Regology’s regulatory change management platform
Tip 4: Pay attention to format and organization. Assume everything in the statute has meaning, including punctuation and format. Look for breaks in the text.
Tip 5: Look for key verbs. Legislative drafters use specific verbs that indicate whether a provision requires or authorizes some action or condition.
- “Shall” means a duty imposed.
- “Must” means a condition that must be met.
- “May” means a privilege or discretionary power.
- “Is entitled to” means a right, as opposed to discretionary power.
- “May not” and “shall not” means a forbiddance.
Tip 6: Look for exceptions to the application. Exceptions are signaled by keywords such as “certain,” “only,” “under,” “over,” “more than,” “less than,” “if,” and “unless”. They can also be indicated by “and” or “or” at the end of a series, which means the elements of the series are included or only one of the elements needs to be included to satisfy the series.
Tip 7: Don’t skip over terms you don’t know or understand. For example, do not assume a word (e.g., “person”) has the same meaning that it has in everyday conversation. Use statutory context (Tip 2) and definitions (Tip 3) to determine the exact meaning of a word.
Tip 8: Read through cross-referenced sections. Legislative drafters avoid repetition of text by the use of cross-references to other statutory provisions. This is why it’s critical to read through the table of contents and definitions section to discern the context.
Image source: Regology’s regulatory law library
Quick Tips for Reading and Understanding a Bill
A bill is composed of three basic parts: introductory language, substantive provisions, and procedural provisions. Scanning the substantive provisions of a bill for certain features can help you learn valuable information quickly, in much the same way that reading the caption informs you about a bill’s general subject matter.
Tip 1: Check to see if the bill is adding new language, amending existing language, or both. Look for underlined or [bracketed] language with strikethroughs. If you are reading the session laws, the new language is indicated by italics rather than underlining. Taking stock of the amount of underlined, italicized text and bracketed text will give you an idea of the bill’s complexity.
Image source: Regology’s regulatory change management platform
Tip 2: Look for definitions. Definitions can help determine the scope of a bill and provide clues about its focus.
- What agencies or entities are involved?
- Is the bill directed at a particular group?
Tip 3: Scan the recital for each bill section.
- Is the bill adding or amending sections or an entire article of the statutes?
- Is it making a series of similar changes to different sections or chapters within the same law?
Tip 4: Look for conforming changes. Often, a bill makes a single substantive change to the law that calls for related changes to be made in other sections of the law. These changes are known as conforming changes.
Hint: Don’t spend time trying to understand a change if it is not substantively changing the statute. These changes are often easy to spot because they involve multiple insertions or deletions of the same words or phrases.
Tip 5: Check for repealers. Read the provisions that the bill repeals.
- How many repealers are there?
- Is the bill replacing one chapter or subchapter with another?
Tip 6: Refer to the sections of the statute to put the bill in context. Understanding the context of the change to law made by the bill is essential to understanding the change.
This easy-to-read guide explains the common terms and parts of a law that Regology works with every day.
Since the foundation of our company is the result of the complex process of legislative oversight and the constant change in laws or regulations, we believe it is important to have a clear understanding of what happens in the drafting process. Regology helps to identify the impact of regulatory changes on your business and save hundreds of hours by tracking multiple types of legislative content such as federal and state-level bills, statutes, registers, administrative codes, as well as publications, enforcement actions and feeds from associated government agencies.
If your organization is looking for a solution to simplify regulatory change management (locally or internationally), contact us today to speak to one of our specialists by filling out this form.