How Do You Prepare An Annual Compliance Budget? (And Ask For More Money)

Budgeting is one of the most important functions in any corporate discipline. Thought leaders do not often talk about this one in conferences and literature. Yet, it’s something that every compliance officer, every CCO, has to do and everyone down the compliance chain. Whether it’s a special project such as a Code of Conduct makeover, major tech upgrade or bringing in an external party to do a comprehensive risk assessment — explore the compliance budgeting process and learn how to plan for such expenses and understand the documentations needed to prepare.

Key points discussed in the episode:

✔️ Determine what your function is responsible for, as it varies at every organization. Identify what resides in your budget and what lives somewhere else?

✔️ Review the guidance. The DOJ’s most recent Evaluation of Corporate Compliance Programs guidance makes it clear that they expect compliance programs to be “adequately resourced and empowered to function effectively.” That means you should budget for enough:

  • People to run your program
  • Tools to operate and maintain your program
  • Resources to make continuous improvements

✔️ Risk assess the program itself – what are the biggest needs? Where do we need more resources? Are we over-resourced in any areas?

  • Have internal operations changed?
  • Have laws or regs changed – or enforcement ramped up?
  • Are there any new risks that we’ve never had before?

✔️Do we have any compliance “messes” or issues that need to be addressed or cleaned up? If so, what will those cost?

✔️ What special projects or improvements are we planning? What do we need to make those projects/improvements successful?

✔️ Benchmarking – look at surveys, talk to other compliance professionals

✔️ Build allies. Talk to anyone who may be able to support or influence your budget. Take the opportunity to explain why you need what you’re asking for and why/how it will help the organization.

✔️ There aren’t any hard and fast rules about budgeting for compliance departments. If you’re under-resourced, it is your job to make enough noise that the C-suite and the board realize what risks underfunding compliance brings to the organization. If nothing else works, use the big guns – worst-case scenarios and how much they could cost.

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Welcome to SURVIVE AND THRIVE, the newest addition to the Compliance Podcast Network. This is a podcast where we unpack compliance, crisis disasters and walk you through all the red flags which appear, and give you some lessons learned going forward. This show is hosted by Compliance Evangelist Thomas Fox and Kortney Nordrum, Regulatory Counsel & Chief Compliance Officer, Deluxe Corporation.

Do you have a podcast (or do you want to)? Join the only network dedicated to compliance, risk management, and business ethics, the Compliance Podcast Network. For more information, contact Tom Fox at tfox@tfoxlaw.com.