31 Days to a More Effective Compliance Program

There are three core areas upon which directors should focus their attention regarding to help establish and maintain an effective compliance program: structure, culture, and risk management. Structural questions. This area consists of questions which will aid in determining the fundamental sense of a company’s overall compliance program. The questions should begin with the basics of the program t...

Where does “tone at the top” start? With any public and most private U.S. companies, it is at the Board of Directors. But what is the role of a company’s Board in compliance? We start with several general statements about the role of a Board in U.S. companies. First, a Board should not engage in management but should engage in oversight of a CEO and senior management. The Board does this through a...

How can a Board work to incorporate the compliance function into a long-term business strategy of the organization? A Board can do so by engaging with the CCO and compliance function through having a strong Board which is committed to doing business ethically and incompliance with anti-corruption laws and engaging actively with the CCO and compliance function. The questions have become even more i...

The 2020 Update mandated a Board of Directors ensure “the sufficiency of the personnel and resources within the compliance function, in particular, whether those responsible for compliance have: (1) sufficient seniority within the organization; (2) sufficient resources, namely, staff to effectively undertake the requisite auditing, documentation, and analysis; and (3) sufficient autonomy from mana...

What is the role of a Board of Directors in hiring senior executives, CCOs and even other board members? I explored this issue with Candice Tal, who began by noting, that bad senior executive hires can cost a company much more than simply dollars. She related, the “financial costs in day-to-day operations easily can quadruple that of a regular employee, but it can also impact the company’s corpora...

The Trump Administration’s trade war with China has highlighted the risks of both doing business in China and investing the Chinese companies which come to America to raise capital. Yet this has been a long-known and outstanding problem in the anti-corruption enforcement world. The 2014 bribery and corruption case of GlaxoSmithKline PLC (GSK), which resulted in a $490 million fine for the firm, re...

Next, consider a couple of landmark failures at the Board level around bribery and corruption. VimpelCom Ltd. In 2015 (now Veon Ltd.), the DOJ alleged that Dutch telecom VimpelCom sought to enter the telecom market through the acquisition of a local player, Unitel, as an entrée into the Uzbekistan market. Unitel made clear to VimpelCom that to have access to, obtain and retain business in the Uzbe...

What are metrics for a Board of Directors around compliance? Former Assistant Attorney General Leslie Caldwell laid out some that the Department of Justice (DOJ) would consider in a review of compliance programs. These metrics are: Does the institution ensure that its directors and senior managers provide strong, explicit and visible support for its corporate compliance policies? Does the Board ma...

Once again, referencing the article, “Successful Board Investigations”, David Bayless and Tammy Albarrán, offered seven considerations to facilitate a successful Board investigation.  Consider whether you need independent outside counsel.  Consider hiring an experienced investigator to lead the internal investigation.  Consider the need to retain outside experts.  Analyze potential conflicts of in...

Many companies have an investigation protocol in place when a potential Foreign Corruption Practices Act (FCPA) or other legal issue arises? However, many Boards of Directors do not have the same rigor when it comes to an investigation, which should be conducted or led by the Board itself. The consequences of this lack of foresight can be problematic, because if a Board of Directors does not get a...

One of the ongoing questions from members of Board of Directors is how to resolve the tension between oversight and managing. I recently had the opportunity to visit with Joe Howell, the Executive Vice President (EVP) of Workiva, Inc. on this subject. Howell has worked on and with Boards of Directors at various companies and I wanted to garner his understanding of the role of a Board and both seni...

James Doty, former Commissioner of the Public Company Accounting Oversight Board (PCAOB) was once asked if the Board or its sub-committee which handles audits was a part of a company’s internal financial controls. He answered that yes, he believed that was one of the roles of an Audit Committee or full Board. I had never thought of the Board as an internal control but the more I thought about it,...

The basic framework for internal controls is derived from the COSO Model developed by the Committee of Sponsoring Organizations of the Treadway Commission in 1992 (COSO). This model has become the standard for an internal control framework and provides a structure to ensure companies address the key elements that should result in an effective system of internal controls. Using the COSO Model, as m...

Where does “tone at the top” start? With any public and most private U.S. companies, it is at the Board of Directors. But what is the role of a company’s Board in compliance? First a Board should not engage in management but should engage in oversight of a CEO and senior management. The Board does this through asking hard questions, risk assessment and identification. Initially it must be importan...

The OIG white paper “Practical Guidance for Health Care Governing Boards on Compliance Oversight” (OIG Guidance), provides an excellent road map for thinking about how to structure a Compliance Committee for your Board and a Board’s obligations. As an introduction, the OIG Guidance states that a Board must act in good faith around its obligations regarding compliance. This means that there must be...

Every Board of Directors need a true compliance expert sitting at the table. Almost every Board has a former CFO, former head of Internal Audit or persons with a similar background and often times these are also the Audit Committee members of the Board. Such a background brings a level of sophistication, training and SME that can help all companies with their financial reporting and other finance-...

Under the U.S. Sentencing Guidelines, the Board must exercise reasonable oversight on the effectiveness of a company’s compliance program. The DOJ Prosecution Standards posed the following queries: 1) Do the directors exercise independent review of a company’s compliance program? and 2) Are directors provided information sufficient to enable the exercise of independent judgment? Moreover, the FCPA...

What are the obligations of a Board member regarding the FCPA? Are the obligations of the Compliance Committee under the FCPA at odds with a director’s “prudent discharge of duties to shareholders”? Do the words prudent discharge even appear anywhere in the FCPA? In the the case of Stone v. Ritter is found the proposition that “a duty to attempt in good faith to assure that a corporate information...

Welcome to this month's offer of 31 Days to a More Effective Compliance Program. This month I will focus on the Board of Directors and its role in an effective compliance program. At the end of August, you will not only have a good summary of the basics of a best practices compliance program for a Board of Directors but information that you can incorporate into your compliance regime. Case law. As...

In this final episode for the month of July on 31 Days to a More Effective Compliance Program, I review the past month's offerings and preview the month of August where I take up the topic of Boards of Directors and Compliance.  Learn more about your ad choices. Visit megaphone.fm/adchoices

In today's edition of 31 Days to a More Effective Compliance Program, I am joined by Vin DiCianni, founder of Affiliated Monitors. Vin provides insights into how the use of data can facilitate the management of third-parties after the contract is signed. 3 Key Takeaways the process of collecting data cleans up much risk and provides cost savings. More reliable data about third-parties will facilit...

One of the areas many companies do not focus on enough is possible corruption in their supply chain for goods and services provided on a company’s behalf. The FCPA risks can be just as great through those entry points as it can be through the sales side of an organization. You need to know who your company is doing business with through this channel as much as you need to know your agents seeking...

The FCPA world is littered with cases involving freight forwarders, brokers and agents in the shipping and express delivery arena. Both the DOJ and SEC have aggressively pursued third-party business relationships where bribery and corruption have been found. This is particularly true where companies are required to deliver goods into a foreign country through the assistance of a freight forwarder...

One of the issues in any compliance program is the compensation paid to a third-party as FCPA exposure arises when companies pay money, either directly or indirectly, to fund bribe payments. Another area that leads to exposure from third-parties is with distributors. In a distributor relationship, the distributor purchases a product; taking risk of loss and title, at a discount from a manufacturer...

At some point, you will be required to terminate a third-party and there will be multiple legal, compliance and business issues to navigate through. If you are stuck doing it in the middle of a FCPA or U.K. Bribery Act investigation, there may well be some tension to do so and do so quickly. If you have not thought through this issue and created a process to follow before a crisis occurs, you may...