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Building an Effective Compliance Program: Hallmarks and Insights

Posted by Sharise Cruz on Tue, Aug 06, 2013 @ 11:47 AM

In November 2012, the criminal division of the U.S. Department of Justice (DOJ) and the enforcement division of the U.S. Securities and Exchange Commission (SEC) jointly released A Resource Guide to the U.S. Foreign Corrupt Practices Act (“the Guide”). While the 130-page guide is packed with useful information and written in an approachable style free from legalese, it provides perhaps its best and most useful information beginning on page 57 in the section titled, “Hallmarks of an Effective Compliance Program.” In the in introduction to this section, the authors note that there is no such thing as a one-size-fits-all compliance program, and that it is expected that small to midsize companies’ compliance programs will very likely differ from those in place at much larger organizations. They also point out that companies may consider a variety of factors in tailoring a compliance program to their specific organizations.

Not unexpectedly, the Guide points out that the information about the hallmarks of effective compliance programs is not intended to be a substitute for a company’s own assessment of the risks that are nuanced to their organization. Organizations must consider a wide array of risk factors, including products and services, geographic markets, customer base, and the extent to which the company is likely to come into contact with foreign officials.

Despite this somewhat lawyerly disclaimer, this is an important document, one that anyone with any role in Foreign Corrupt Practices Act (FCPA) compliance should read over and over again. It is a clear statement from the government that “this is what we are looking for” in your anti-corruption program. Indeed, when evaluating a compliance program and designing audit procedures to test the efficiency of such programs, it is prudent to consider the elements that the government construes to be of critical importance. This white paper summarizes these program hallmarks and includes excerpts from each section of the Guide and information needed to provide further insight.

The Hallmarks of an Effective Compliance Program

As depicted in the accompanying graphic, the 10 hallmarks of an effective compliance program are:

A. Commitment from Senior Management and a Clearly Articulated Policy Against Corruption

B. Code of Conduct and Compliance Policies and Procedures

C. Oversight, Autonomy and Resources

D. Risk Assessment

E. Training and Continuing Advice

F. Incentives and Disciplinary Measures

G. Third-Party Due Diligence and Payments

H. Confidential Reporting and Internal Investigation

I. Continuous Improvement: Periodic Testing and Review

J. Mergers and Acquisitions: Pre-Acquisition Due Diligence and Post-Acquisition Integration



Topics: Protiviti, laws & regulations, fraud, Foreign Corrupt Practices Act, compliance, ethics, white papers, corruption

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