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 maintain a material role in overseeing a company’s overall compliance framework?
These requirements move beyond simply having the correct tone at the top, which every Board should articulate. The 2020 Update to the Evaluation of Corporate Compliance Programs added the following, under Oversight by posing the following questions: What compliance expertise has been available on the board of directors? Have the board of directors and/or external auditors held executive or private sessions with the compliance and control functions? What types of information has the board of directors and senior management examined in their exercise of oversight in the area in which the misconduct occurred?
Based on the foregoing, when determining the Board’s role, begin with two questions. First, does the Board of Directors exercise independent review of a company’s compliance program? Second, is the Board of Directors provided information sufficient to enable the exercise of independent judgment?
Three key takeaways:
- The DOJ expects active engagement by a Board around compliance.
- Does the Board exercise independent review of the compliance program?
- The convergence of the Yates Memo, Caldwell’s metrics, the Evaluation, and FCPA Corporate Enforcement Policy mandate Board metrics around compliance.
For more information, check out The Compliance Handbook, 4th edition, available here.
