A corporate compliance program is there to make sure that your company complies with the laws or even regulations that apply to it. Remember that corporate ethics and compliance can be a complex field to understand. Therefore, if you intend to have a compliance program, you may be wondering why companies implement these corporate compliance programs in the first place. The truth is that there are a variety of reasons why companies need these programs. This post explains everything you need to know about a corporate compliance program.
The goal of a corporate compliance program
As mentioned earlier, the aim of a corporate compliance program is to ensure that your company complies with both the regulations and laws that apply to it. In the past, it usually involved dealing with regulatory reporting. This means a company needs to file reports with the state regularly. These were health and safety alerts, financial reports, annual reports for government contracts or grants, and many other types of reports. There were compliance departments responsible for confirming that the right data was written on the right forms. Then, the forms were filed with the right agency at the proper time.
These basic concepts that required companies to adhere to rules and document this adherence still exist. Today, though, there is a corporate compliance program that focuses on creating and managing systems to make sure that regulatory compliance is there all the time. The federal, state, and even prosecutors have increased their enforcement against any corporate misconduct, such as large monetary penalties. The ideal way for your company to avoid these penalties is to show that you were attempting to follow the corporate compliance law. However, if either third parties or employees working for your organization violated the law, then compliance programs can give proof that you can show prosecutors.
For instance, if you train your staff that bribing foreign government employees violates the Foreign Corrupt Practices Act, then you need to provide this proof to the government. You need to provide the training records, email records of the staff indicating the violation. This documentation can convince the prosecutors to pursue the staff in question rather than your company. Failure to implement a good compliance program cannot help your company avoid penalties. A good compliance program shows that your company is aware of the laws and rules that apply to it. It also demonstrates that your company takes reasonable steps to follow these rules and laws.
Corporate compliance programs expansion
In practice, it appears corporate compliance programs have taken many more duties because the risks to companies have increased. Many of these risks are still based on some regulatory compliance issues like data privacy, trade sanctions, environmental, labor standards, and many more. However, these risks can also spill over and threaten your company’s reputation with business partners, consumers, and other stakeholders. So preserving your reputation with these groups needs to be your top priority.
For instance, your company can have several senior or mid-level managers who sexually harass new employees. This means there is a risk of regulatory investigation into this misconduct, but it can be relatively smaller than litigation risk, reputation risk, or operational risk.
Therefore, your company needs to have policies and procedures to manage data privacy, harassment, onboarding for third parties or customers, and many other issues. A corporate compliance program is there to make sure that these policies and procedures manage your company’s risks in an effective and practical way. This can mean anything from investigating complaints to developing new training to studying data related to many employees who are or are not following policy.
Simply put, you just need to have a policy that discourages harassment and a system to make sure that your company is attempting to prevent harassment, data leaks, bribery, trade violations, and many more. It’s worth noting that running a corporate compliance program is also as important as designing it. You need to put much effort and thought into the monitoring and reviewing process.
Not only does a company change over time but so do the laws and regulations that govern your company operations and industry. This can render the initial assessment of risks outdated. Risks constantly evolve and change as should the compliance monitoring process. The guidance that is released by enforcement agencies usually emphasize this point. After all, a stale corporate compliance program is considered to be a failed program regardless of how good your compliance monitoring process was designed initially.
Many businesses are required to implement specific measures to reduce the risk of compliance failure. Some industries that are strictly regulated must have controls in place to ensure the unethical behavior that can harm your customers and employees is not allowed to happen. Therefore, if your company is this highly-regulated industry and there is no corporate compliance program, then you are in danger.
Besides, a corporate compliance program can act as a defence for your company. It can give you protection against fines and penalties, which may be large enough to affect your company. The Federal Sentencing Guidelines state that you can be entitled to a reduced fine if you run an effective compliance program. Individuals can be subjected to prison sentences and your company that has a government contract may also be put in its form of prison debarment or even disqualification from conducting business with the federal government or state. But the compliance program can offer the basis to negotiate a non-prosecution agreement or deferred-prosecution with a government prosecutor.
Above all, ethics can be a good foundation for your company to build on. Without them, your company can collapse easily. Besides, a corporate compliance program can assist to dissuade some people from turning a blind eye to practices that are considered unethical.
Your company should have resolute workers who can’t sacrifice their integrity for money. These types of workers recognize right from wrong, so they can become whistleblowers if they need to. Your corporate compliance program can make sure that these workers share these values. Read at https://www.jdsupra.com/legalnews/12-keys-to-a-successful-corporate-1619282/ for keys to a good compliance program.
