The United States Sentencing Commission has amended its standards governing corporate compliance and ethics programs. These amendments warrant attention for two reasons. First, they clarify the steps that companies should take after detecting criminal conduct in order to remedy the resulting harm and to prevent future criminal conduct. Second, the amendments augment the compliance officer's reporting obligations to the company's board of directors. Companies should review and modify existing corporate compliance programs in light of these changes to ensure that they conform to the new standards.
The Sentencing Guidelines' provisions regarding compliance and ethics programs have import well beyond the relatively few companies that stand convicted of criminal offenses. Prosecutors and government regulators commonly consider the adequacy of a company's compliance program when determining whether to bring criminal charges or a civil enforcement action against a company, or whether to offer a non-prosecution agreement. A robust compliance program can also help a company avoid or mitigate liability in private litigation. Accordingly, all companies should be mindful of the guidelines applicable to compliance and ethics programs.
To help, we have put together a quick quiz for you to assess your company's compliance program.:
- Does the leadership promote a culture that encourages ethical conduct and a commitment to compliance with the law?
- Is the purpose of your compliance program to prevent and detect criminal conduct? Any other goal is secondary.
- Are there clear and concise written standards and procedures?
- Are those standards and procedures communicated through training programs appropriate to the listeners' respective roles and responsibilities?
- Does the organization use due diligence to prevent and detect criminal conduct? Does it know its own employees, partners, agents, and suppliers?
- Has overall and day-to-day operational responsibility for the program been assigned to high-level individuals? Do they know and understand the content and operation of the compliance and ethics program?
- Have they been given adequate resources, appropriate authority, and direct access to the top decision-making body? Do they report about compliance up the chain of command periodically?
- Would anyone involved in the administration of the compliance program whose conduct is inconsistent with its aims and goals be removed?
- Is the program monitored and audited by a third party to make sure it works to prevent and detect criminal conduct?
- Is there a system in place to handle anonymous whistleblower complaints from employees and other stakeholders, without fear of retaliation?
- Is the program promoted and enforced consistently throughout the organization, with rewards for compliance and punishment for non-compliance?
- Does the organization respond to criminal conduct with corrective action and appropriate modifications to the compliance program?
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
