In my many years evangelizing the virtues of compliance, I have often discussed how the compliance profession thrives on predictability and clarity. However, the recent whirlwind of policy initiatives from the Trump administration presents corporate compliance professionals, particularly audit committees, with unprecedented oversight pressures and challenges. More than ever, audit committees must demonstrate agility, vigilance, and a robust commitment to compliance principles amidst rapid and unpredictable policy shifts.
Fortunately, our colleagues Michael W. Peregrine and Ashley Hoff from McDermott Will & Emery LLP have recently released a paper on this topic entitled Audit Committees Face Significant New Compliance Oversight Pressures. Every Chief Compliance Officer (CCO), Board member, and Audit or Compliance Committee member must read and study their paper as they list multiple lessons learned from this evolving landscape under this second Trump Administration. I have used the author’s thoughts as a framework that a corporate compliance function can use to work with an audit committee to navigate the chaos.
1. Embrace Agility in Compliance Management
The Trump administration’s “flood the zone“ strategy illustrates vividly that agility is no longer optional; it is now imperative for business. Compliance professionals must swiftly adapt to shifting regulatory priorities, ensuring their compliance programs can pivot quickly. Practically speaking, your compliance framework must include flexible risk assessment procedures that can be revised soon in response to policy developments. Audit committees and compliance officers should work closely to stay current on the latest regulatory shifts, adjusting their oversight activities in real time rather than waiting for settled interpretations.
2. Maintain Vigilance Despite Perceived Relaxations
The temptation for corporate leadership to interpret recent DOJ actions, such as the temporary pause on FCPA enforcement, as a relaxation of compliance standards is substantial. However, compliance professionals must actively resist this complacency. The DOJ’s statutory enforcement authority remains unchanged; fraud statutes persist irrespective of administrative fluctuations. Maintaining vigilance ensures that your organization does not inadvertently plant seeds of unethical conduct that might grow unchecked into serious compliance breaches, potentially coming to light once regulatory priorities shift again.
3. Audit Committees Must Stay Proactive and Informed
The decision by DOJ officials not to appear at historically significant events such as the ABA’s annual White Collar Conference underscores a critical lesson. Compliance professionals and audit committees can no longer rely solely on traditional avenues of regulatory communication. It is imperative that they proactively seek out and engage with information through multiple channels, such as DOJ memoranda, policy announcements, speeches from senior leaders, and robust legal analyses provided by external compliance experts. Staying informed is not passive; it demands intentional and constant effort.
4. Preserve a Strong Compliance Culture
One significant risk associated with the current regulatory environment is the potential erosion of the culture of doing business ethically and in compliance within organizations. Perceptions of decreased regulatory scrutiny can lead to a relaxation of internal controls and risk assessment standards. To counter this, audit committees and compliance officers must consistently reinforce their commitment to compliance values, emphasizing to executive leadership and employees that compliance expectations remain unwavering, regardless of the current administration’s stated priorities. Compliance training and clear communication are essential in reinforcing the importance of ethical behavior, particularly during periods of perceived leniency.
5. Prepare for Expanded Compliance Responsibilities
The extensive issuance of Executive Orders by the Trump administration has created new and varied compliance obligations spanning healthcare, immigration, DEI initiatives, and federal contracting requirements. Audit committees and compliance professionals must closely monitor these developments and adjust their oversight practices accordingly. This requires expanding the scope of your compliance programs, creating additional controls and training tailored to these evolving obligations, and ensuring adequate staffing and resources.
6. Advocate for Adequate Compliance Resources
The turbulent regulatory landscape underscores the necessity for robustly funded and resourced compliance programs. Audit committees are critical in advocating for sufficient investment in compliance personnel, technology, and training. Now is not the time to diminish compliance budgets. It is an opportune moment to argue for greater investment, ensuring the compliance function is well-equipped to navigate ongoing volatility.
7. Educate, Train, and Communicate
Effective compliance education is paramount amid regulatory uncertainty. Ensure your workforce understands the current compliance requirements and the underlying rationale behind maintaining high compliance standards, even when immediate regulatory oversight may appear diminished. Addressing potential internal misperceptions head-on prevents employees from pushing ethical boundaries unnecessarily. Regular training sessions, town halls, compliance communications, and leadership messaging are vital to maintaining clear and consistent standards.
8. Uphold Accountability Through Caremark Standards
Despite administrative shifts, Delaware courts have shown no signs of loosening the stringent Caremark standards for director and officer oversight responsibilities. This underscores the critical importance of boards and audit committees in demonstrating robust compliance oversight. Compliance professionals must, therefore, continually remind board members of their fiduciary responsibilities and help them understand that maintaining rigorous compliance oversight is not just prudent—it’s legally essential.
Final Thoughts: The Compliance Imperative
The era ushered in by the second Trump administration has undeniably challenged compliance professionals and audit committees in unique ways, but it also presents an opportunity. By learning these lessons, embracing agility, maintaining vigilance, proactively seeking information, safeguarding compliance culture, expanding oversight responsibilities, advocating for resources, reinforcing education, and upholding accountability, compliance officers can effectively navigate regulatory turbulence and fortify their organizations against uncertainty.
The most successful compliance programs will view current challenges not as obstacles but as opportunities to deepen their organizational commitment to compliance, ethics, and integrity. As compliance professionals, our mission remains clear: to guide and protect our organizations through change, preserve trust, and ensure sustainability beyond any single administration’s tenure.
