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Elements of an Effective Corporate Compliance Program

Paul McNulty and Stephen Martin of the Baker and McKenzie law firm developed what they call the "Five Essential Elements of a Corporate Compliance Program" that are based upon the best practices set out in the seven elements of corporate compliance. Below we've listed their five elements and why your organization needs to implement them to any corporate compliance program.

1. LEADERSHIP

True corporate leaders set the tone at the top, this is also true with a successful compliance program. Corporate compliance programs should be built on a solid foundation of ethics that should be backed entirely by senior management. Their commitment to compliance will have a trickle-down effect on the rest of the organization. Some of the questions to think about when discussing your compliance program's leadership are;

  • How is board oversight implemented?
  • Is there an ethics or audit committee reporting to the board?
  • What is the role of the Chief Compliance Officer?
  • Does the CCO have the capabilities to manage compliance effectively?

2. RISK ASSESSMENT

A corporate compliance program implementation is more than following sets of accounting and training rules. They need to reach multiple areas of your business; you need to know where your highest risks are and how to effectively mitigate that risk moving forward. Risk assessments give you a "big picture" idea of your entire compliance environment and allow for you to more easily prioritize your efforts.

3. STANDARDS AND CONTROLS

Every company usually has three levels of standards and controls;

  1. Code of Conduct
  2. Standards and Policies
  3. Procedures

Each of these have become the general practice for most organizations. However, the FCPA best practices now require companies to have additional standards and controls that emphasize detail on specific protocols, screenings, and associations. Compliance programs can no longer be words on a piece of paper, they need to be utilized on a daily basis.

4. TRAINING

Compliance is a multi-faceted process that needs to be acknowledged by your employees consistently. The government is constantly changed and amending new policies that affect businesses across different industries. Training your corporate officers, employees and third parties on laws, regulations, corporate policies, and prohibited conduct should be a high priority. Compliance training needs to be detailed, helpful, and knowledgeable to all employees to ensure that it actually gets through to employees.

5. OVERSIGHT

Oversight includes all of the activities relevant to keeping your employees engaged with your corporate compliance program. After the messages have been communicated and the key controls have been put into place, you should still be monitoring your employees for their adherence to the compliance program. 

Implementing the elements of an effective corporate compliance program is trending towards becoming more of an automated process. Cloud-based compliance software solutions are the way of the future. To learn more, click the button below.