Implementing an Effective Compliance Program

By
David Kinnear
risk management
risk management

Introduction

As an integral part of an overall internal risk management procedure, your compliance program should at a minimum:

  • identify the regulatory risks affecting your company,
  • determine whether or not your current practices might breach those requirements,
  • formulate a risk prevention and remedy plan, and
  • institute a corporate culture of compliance within your company that includes ethics training for employees.

The Wide Reach of Ethical Considerations

Although traditionally the term professional ethics conjured up concerns about medical ethics, legal ethics, and accounting practices, today the term has been expanded to encompass not only all of the financial sector, but also a broad range of everyday commercial undertakings engaged in by virtually all companies.

What Areas of Corporate Conduct Should Be Included in Your Compliance Program?

While compliance requirements for each business differ from industry to industry, and an effective compliance program for your company must be tailored to your type of industry, there are, nevertheless, certain fundamental topics that apply to most, if not all, businesses. Here are nine crucial areas to examine:

  1. Handling of Confidential Information
  2. Potential for Insider Trading Violations
  3. Conflicts of Interest
  4. Non-complying Accounting Practices
  5. Sarbanes-Oxley (SOX) Violations
  6. Financial Accounting and Records Maintenance Problems
  7. Use (or Misuse) of Company Property
  8. Handling of Client and Vendor Gifts, Favors, and Gratuities
  9. Proper and Timely Reporting of Ethical and Compliance Concerns

Across The Board Ethics Training

Equally important to maintaining a sound compliance monitoring and resolution program is instituting a comprehensive, mandatory, and ongoing ethics training program for all employees who are likely to encounter the above issues while carrying out their various and sundry business functions—in other words, just about everyone!

Conclusion

Developing a corporate compliance program that includes in-depth ethics training will promote honest and ethical employee conduct, increase the likelihood of compliance with applicable laws, and provide employees with clear guidelines and expectations as to what practices are acceptable—and legally permissible—versus those that pose a risk of liability for the company and, therefore, must be avoided.

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