A strong compliance program is vital for every organization. Compliance failures, whether for violations of OFAC mandates, the FCPA, or other significant regulations and laws, can cause financial losses, lost productivity, and create civil and criminal liability. Avoid compliance lapses by adopting these three compliance objectives for 2020.
With the start of a new year, and a new decade, now is the time to review, update, and improve your Code of Conduct, and related compliance tools. Focus on improving your reporting hotline to assure that employees, board members, and vendors report suspected misconduct. Prevent, identify and mitigate misconduct by performing due diligence on third-parties. Utilize internal data, including accounts payable records, to ferret out vendor fraud occurring in growth economies. Regularly communicate compliance expectations to employees and vendors.
Every good compliance program must feature a robust and evolving Code of Conduct that governs the conduct of every employee, vendor, and board member. The Code should establish guidelines and policies for a great number of important ethical and business practices including those involving entertainment, related party dealings, use of third-parties, hotline usage, and disclosures of suspected misconduct. The Code of Conduct must be understood and acknowledged by employees, board members, and vendors in writing. The Code must clearly provide contact information for those with questions or concerns.
Hotlines are the most important tool in the compliance toolbox. Improve the effectiveness of your reporting hotline. Require that vendors and employees report suspected misconduct. Regularly communicate the importance of your hotline, and explain exactly when and how it should be used, to all subject to the hotline’s mandates. Perform audits to assure that your hotline is being utilized, and that reports are being addressed in a timely and effective manner.
Don’t wait for issues to arise. Compliance professionals should be proactive in their mission. A pound of prevention, goes the saying, is worth a pound of cure. Perform due diligence before third-parties are retained. Analyze the hotline’s effectiveness. Assess the effectiveness of internal controls that govern procurement, where most fraud today occurs. Focus on high-risk geographies.