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31 Days to More Effective Compliance Programs

One Month to a More Effective Compliance Program with Boards – The Board Compliance Committee

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 Resource Guide, 2nd edition required a CCO to have direct access to the Board or an appropriate sub-committee and requires a tangible commitment from the top levels of an organization, starting with the Board of Directors, that the company creates an ethical culture.

This requirement was brought forward in 2017 in the FCPA Corporate Enforcement Policy. Finally, nn the 2020 Update to the Evaluation of Corporate Compliance Programs, under the section entitled Oversight, it posed 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?
Today’s regulatory climate and hyper-transparency in social media make a Board Compliance Committee’s task seem Herculean. But more than simply the regulatory climate, shareholders are taking a much more active role in asserting their rights against Boards of Directors. It is incumbent that Boards seek out and obtain sufficient information to fulfill their legal obligations and keep their company off the front page of the New York Times, Wall Street Journal or Financial Times, just to name a few, to prevent serious reputational damage. A Board Compliance Committee is a good place to start.
Three key takeaways:

  1. The Board Compliance Committee exists to provide oversight and assist the CCO, not to substitute its judgment for that of the CCO.
  2. The Board Compliance Committee should work to hold the CCO accountable to hit appropriate metrics.
  3. The Board Compliance Committee is ideal for leading the efforts around strategic planning.

For more information check out The Compliance Handbook, 3rd edition, available from LexisNexis here.