Disclaimer: This blog is for general information purposes only and does not constitute legal advice and does not create or intend to create an attorney-client relationship. This blog post should never be used to replace the advice of your personal attorney.
A business should at all times remain within the confines of the law and applicable regulations. How can a business do this? By implementing a corporate compliance program. There were always some examples of companies’ compliance efforts, though, originally, this typically involved filing reports to the government. Finance reports, health and safety reports and any other piece of paperwork the government needed would fall under a corporation’s compliance program along with guidelines that constitute ethical behavior. However, in more recent times where accurate reporting still applies, corporate compliance programs have the job of implementing, maintaining, and improving systems to ensure no laws get broken. This new culture of compliance ensures everyone is held accountable.
Why Do I Need A Corporate Compliance Program?
Do you want to protect your business from the state, federal, and even oversea prosecutors that can bring hefty fines against you? On the assumption that the answer is yes, then your business needs a corporate compliance program. A corporate compliance program shows that your company knows the laws and works to follow them. Suppose an employee breaks one of these laws, despite the corporate compliance program providing the necessary training to avoid that from happening, along with clear evidence that this employee received adequate training. In that case, the employee will be prosecuted, instead of the company as a whole.
Creating A Corporate Compliance Program
There are seven key components when it comes to a company’s compliance program. Each one should receive significant thought and care to ensure the program achieves its goal. However, the first component should take priority as it is the keystone of the program.
The Code Of Conduct
When it comes to the corporate compliance programs, employees of a company will first turn to the written policy, with the U.S. Department of Justice (DOJ) ultimately deciding what should be included, at least in the United States. This code of conduct should outline the company’s expectations and apply it to every employee, whether a concierge or senior management, direct employee or subcontractor. This collection of compliance policies should receive a signature of approval from the head of the company. Then continuous access should be made available for everyone, often via a website link.
The Compliance Officer
A company’s compliance officer has the difficult task of overseeing the compliance function, ensuring everyone in the company follows the above code of conduct. For that reason, a chief compliance officer typically reports directly to the company’s head, whether a CEO or Board of Directors. Reporting to someone at a middle management level could have a conflict of interest. Some businesses opt to outsource this position for third-party management.
Corporate Compliance Programs Training
Training for new employees and refresher courses for existing ones should include corporate compliance training programs. The training exercises that explain expected employee behavior and risk management and the following tests from the onboarding process should get stored as a point of reference that the company has done its due diligence.
Corporate Compliance Reporting Hotline
A compliance reporting hotline is an integral part of an effective compliance program, as it is how the compliance officer becomes aware of breaches in the code of conduct. The reporting hotline could be an email, phone number (though it should be toll-free), or even a mailing address, and both employees and the general public should have direct access. The hotline should also allow for confidential reporting.
Monitoring And Auditing
A Company’s compliance officer should not just wait for reports of compliance breach to come to them, but be proactive and make sure it’s not happening on their watch, whether detected by others or not. As a minimum of internal control, there should be an annual risk assessment per the specifics of the company. This internal audit should include interviewing key employees, along with considering any compliance issues that occurred since the last evaluation. With monitoring and auditing of risk areas complete, the code of conduct can get revised, as continuous improvement is necessary.
Investigation And Correction
Even with the best-laid code of conduct, there is still a chance, no matter how minimal, that a breach of compliance can occur. When this happens, a company needs to act quickly to minimize the damage. A qualified team needs to work out the nature of the incident. They should also ascertain how, why, and when it happened. The investigation needs to identify the root of the issue and take action to make sure it doesn’t happen again. Depending on the problem, there may be a need for corrective action.
Disciplinary Action Policies
Sometimes the breach of compliance requires disciplinary measures. These company policies outlined clearly should apply at all levels of the company. Employees that know they will be held accountable for their actions, typically won’t be a high-risk, as they will work to remain in compliance with the code of conduct, which in turn leads to an effective program
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Understanding The Risks Of Non-Compliance
The above components outline what a corporate compliance program should contain. The above provides an excellent outline for a company to start a compliance program. But what if it’s still not clear why you should?
There is no better incentive for implementing a corporate compliance program than to understand the breach of compliance risks you might face if you don’t. U.S. sentencing guidelines dictate the exact punishment. Massive fines imposed on business in case of failure to comply with the law are good examples. The amount could range from a few thousand to over a million, neither of which is a small change.
Along with the fines, the government may impose restrictions on your business or revoke your license. In turn, this would leave you with fines to pay and no income to pay them with. That can ruin most companies, so it’s not worth the risk.
Implement a thorough corporate compliance program to avoid the above, and if you are still not sure how, you can contact us here at TCPA Protect. We can also perform an evaluation of corporate compliance programs to ensure the ethics program meats DOJ guidelines.
Additional Reading: What Do Not Call List Means