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Effective Compliance Programs



Elements of a Compliance Program

Elements of a Compliance Program



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Effective Compliance Programs Effective Compliance Programs Document Transcript

  • How to Tell If You Have An Effective Compliance Program By Danforth Newcomb Shearman & Sterling LLP Goals •Achieve Company Business Goals without Violations of Law • Provide Benefits that Outweigh Costs •Create a Culture that Values Compliance Assumptions •Limited Compliance Resources •Challenging Compliance Environment Elements •Design •Implementation •Enforcement Starting Points •Comprehensive Risk Assessment •Industry’s Compliance Problems •Current Enforcement Trends •Company’s Compliance History –Prior Problems –Complaints –Subpoenas & Inquiries •Sentencing Guidelines Seven Steps •Standards & Procedures •Assign Compliance Responsibility •Diligence in Delegation •Communicate Effectively •Monitor & Audit •Disciplinary Mechanism •Respond Appropriately
  • Standards •Clear & Concise •Law and Ethics •Apparent Senior Buy-In Procedures •Not the Law First •Front Line Business is Your Client •Industry Standards •Updated Frequently •Compliance Involved in New Products Assign Compliance Responsibility •Direct & Regular Access to the Board •Participates in Training Programs •Credible with the Businesses •Credible with Regulators •Sufficient Resources •Ranks with Auditor & Counsel Diligence What •Negative and Positive Diligence •Periodic Updates •Events •Elapsed time •Written Reports •Independent Review and Approval Diligence Who •Employees •New Hires •Long Time People •Agents, Sales Reps., Distributors •Suppliers, Service Providers •Partners, Joint Venture Parties
  • Communicate Effectively •Use Several Media •Written References & Manuals •Videos •Interactive, Role Playing, Board Games •On Demand Communication •Hot lines •Help Desks •On line • Effective Training Personnel • Recurrent Training •When responsibility changes •When Standards Change •Periodic updates •Document Participation in Training Compliance Monitoring •Documentation Complete •Procedures Up to Date •Training Received •Testing •Certification Non Compliance Monitoring •Look for Exceptions & Work Arounds •Assume Intentional Non Compliance by a Few •Centralize Complaints & Subpoenas •Encourage & Protect Whistle Blowers Auditing •Different People •Well Defined Work Program •Existing Procedures •Developed with Compliance Function •Limit Auditor’s Interpretation of Standards •Resolve Audit Findings
  • Disciplinary Mechanisms •Design with Human Resources • A Graduated Range •Apply Consistently to All Levels •Tabulate and Report to Board on Discipline Respond Appropriately •Have a Crisis Response Team & Plan •Avoid Premature Assurances •Investigate the Facts •Use Disinterested Investigators •Protect the Privilege •Make Timely Disclosure •Regulators •Shareholders •Customers •Local community •Employees •Document Lessons Learned •Make Appropriate Program Modifications •No Program can Prevent or Detect All Offenses
  • A Self Audit Checklist •Comprehensive Risk Assessment in the Last Two Years •Clear & Concise Standards •Senior Sponsorship of Standards •Procedures in Business Terms •Chief Compliance Officer within 3 levels of the Board of Directors •Compliance Officer Known by Name to Top Regulators •Employees (& Others) Vetted for Compliance Conduct in Writing •Compliance Training Materials in Several Media •Recurring Compliance Training •Compliance Hot Line •On Line Compliance Procedures •Compliance Training Documented •Compliance Understanding Tested •Annual Compliance Monitoring •Centralized Complaints & Subpoenas •Whistle Blowers Call Frequently •Audit Work Program Developed with Compliance Function •Crisis Team Identified by Name •Crisis Plan in Writing •Documented Compliance Lessons Learned •Compliance Program Modified from Lessons Learned © Shearman & Sterling LLP 2009