Federal Sentencing Guidelines for The Organizations


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Federal Sentencing Guidelines for The Organizations

  2. 2. AGENDA <ul><li>Why one should be Ethical? </li></ul><ul><li>Ethical Issues in Business </li></ul><ul><li>Why do companies develop ethics programs? </li></ul><ul><li>Federal Sentencing Guidelines </li></ul><ul><li>Seven Elements of the Program </li></ul><ul><li>Role of an Ethics Officer... </li></ul><ul><li>Sustaining an Effective Program </li></ul><ul><li>training </li></ul><ul><li>Modifications To the Guidelines </li></ul><ul><li>Impact of Guidelines </li></ul><ul><li>Conclusion </li></ul><ul><li>Questions and Answers </li></ul>
  3. 3. Why one should be Ethical? <ul><li>Corporate Ethics = Profits... </li></ul><ul><li>Improved financial performance </li></ul><ul><li>Reduced operating costs </li></ul><ul><li>Enhanced corporate reputation </li></ul><ul><li>Increased ability to attract and retain employees </li></ul>
  4. 4. Ethical Issues in Business
  5. 5. Key Causes of Unethical Behavior... <ul><li>meeting overly aggressive financial or business objectives </li></ul><ul><li>meeting schedule pressures </li></ul><ul><li>helping the organization survive </li></ul><ul><li>rationalizing that others do it </li></ul><ul><li>resisting competitive threats </li></ul><ul><li>saving jobs </li></ul>
  6. 6. Key Influences on Ethical Behavior... <ul><li>personal values </li></ul><ul><li>supervisor influence </li></ul><ul><li>senior management influence </li></ul><ul><li>internal drive to succeed </li></ul><ul><li>performance pressures </li></ul><ul><li>lack of punishment </li></ul><ul><li>friends/coworker influence </li></ul>
  7. 7. Why Misconduct Is Not Reported... <ul><li>fear of not being considered a team player </li></ul><ul><li>did not think corrective action would be taken </li></ul><ul><li>fear of retribution (from management) </li></ul><ul><li>“ no one else cares, why should I” </li></ul><ul><li>did not trust the organization to keep report confidential </li></ul>
  8. 8. Causes of Ethical Disasters… <ul><li>failure to understand the role of business ethics in an organizational culture </li></ul><ul><li>lack of effective leadership </li></ul><ul><li>focus on the bottom above all else </li></ul><ul><li>short term focus </li></ul><ul><li>belief that it could happen to us </li></ul><ul><li>downloading of responsibility to lawyers & accountants </li></ul><ul><li>ineffective corporate governance </li></ul>
  9. 9. Classification of Ethical Issues... <ul><li>conflict of interest </li></ul><ul><li>honesty and fairness </li></ul><ul><li>communications </li></ul><ul><li>organizational relationships </li></ul>
  10. 10. Why do companies develop ethics programs? <ul><li>to allow employees and stakeholders to understand the values of the business </li></ul><ul><li>to comply with policies and codes of conduct </li></ul><ul><li>TO CREATE THE ETHICAL CLIMATE OF THE BUSINESS </li></ul>
  11. 11. Federal Sentencing Guidelines for Organizations...
  12. 12. Why Compliance Programs? <ul><li>Why Ethical Programs Are Essential </li></ul><ul><ul><li>Raise Awareness </li></ul></ul><ul><ul><li>Mitigating Factor </li></ul></ul><ul><ul><li>Communicate Organization’s Commitment </li></ul></ul><ul><ul><li>Avoid Investigation </li></ul></ul><ul><ul><li>Reduce Threat of Qui-Tams </li></ul></ul>
  13. 13. Purpose <ul><li>to exercise due diligence to prevent and detect criminal conduct </li></ul><ul><li>otherwise promote an organizational culture that encourages ethical conduct and a commitment to compliance with the law </li></ul>
  14. 14. Organizations under FSGO  <ul><li>Corporations </li></ul><ul><li>Partnerships </li></ul><ul><li>Associations </li></ul><ul><li>Joint stock companies </li></ul><ul><li>Unions </li></ul><ul><li>Trusts </li></ul><ul><li>Pension funds </li></ul><ul><li>& others </li></ul>
  15. 15. Original 7 Hallmarks of FSGO <ul><li>Prevention and Detection Procedures </li></ul><ul><li>High Level Oversight </li></ul><ul><li>Due Care in Delegation of Authority </li></ul><ul><li>Communication, Training and Education </li></ul><ul><li>Monitoring, Auditing and Reporting Systems </li></ul><ul><li>Enforcement and Discipline </li></ul><ul><li>Appropriate, Consistent Response </li></ul>
  16. 16. FSGO Considerations if Misconduct Is Determined... <ul><li>organizations must remedy any harm caused by the offense </li></ul><ul><li>if criminal purpose, fines are designed to put the firm out of business </li></ul><ul><li>fines are based on the seriousness of the offense as well as culpability </li></ul><ul><li>probation may be assigned </li></ul>
  17. 17. Top Ten Unethical Behaviors Reported by Employees ... <ul><li>sexual harassment </li></ul><ul><li>lying on reports or falsifying records </li></ul><ul><li>conflicts of interest </li></ul><ul><li>theft </li></ul><ul><li>lying to supervisors </li></ul><ul><li>discrimination </li></ul><ul><li>drug or alcohol abuse </li></ul><ul><li>improper accounting procedures </li></ul><ul><li>violation of environmental laws </li></ul><ul><li>gift/entertainment violations </li></ul>
  18. 18. Code of Ethics... <ul><li>formal statement of what an organization expects in the way of ethical behavior (what behaviors are acceptable or unacceptable) </li></ul><ul><li>reflects senior management’s organizational values, rules, and policies </li></ul>
  19. 19. Six Steps in Implementing a Code of Ethics... <ul><li>distribute internally & externally </li></ul><ul><li>assist employees in understanding </li></ul><ul><li>specify management’s role </li></ul><ul><li>make employee’s responsible for understanding the code </li></ul><ul><li>establish grievance procedures </li></ul><ul><li>provide a concluding statement </li></ul>
  20. 20. How CEOs Support Ethics Initiatives... <ul><li>communicate directly with employees </li></ul><ul><li>use their own “phraseology” </li></ul><ul><li>tout successes and condemn failures </li></ul><ul><li>use one standard for all employees (regardless of level) </li></ul><ul><li>acknowledge & promote ‘ethically aware’ managers </li></ul><ul><li>survey employees about the program </li></ul>
  21. 21. Role of an Ethics Officer... <ul><li>Step 1: Conduct a rigorous self-assessment </li></ul><ul><li>Step 2: Ensure commitment from the top of the organization </li></ul><ul><li>Step 3: Publish and distribute Code(s) of Ethics and related guidance materials </li></ul><ul><li>Step 4: Communicate, communicate, and communicate once again </li></ul>
  22. 22. <ul><li>Step 5: Training </li></ul><ul><li>Step 6: Provide confidential resources </li></ul><ul><li>Step 7: Ensure consistent implementation </li></ul><ul><li>Step 8: Respond and enforce consistently, promptly, and fairly </li></ul><ul><li>Step 9: Monitor and assess </li></ul><ul><li>Step 10: Revise and reform </li></ul>
  23. 23. Sustaining an Effective Program <ul><li>Employees are encouraged to ask questions and get advice before taking action. </li></ul><ul><li>Employees receive prompt, useful, and accurate advice about ethical workplace behavior. </li></ul><ul><li>Employees receive, read, and use ethics program materials. </li></ul><ul><li>Employees, managers, and board members participate in regular training about ethics and compliance. </li></ul>
  24. 24. Sustaining an Effective Program <ul><li>Information about ethics and compliance is communicated to all internal and external stakeholders. </li></ul><ul><li>The rules (both written and unwritten) stay the same in good times as well as in bad times. </li></ul>
  25. 25. Training <ul><li>Is Training Required? </li></ul><ul><li>How Does Ethics Training Occur </li></ul><ul><li>Development of a code of ethics (79%) </li></ul><ul><li>Lectures (63%) </li></ul><ul><li>Workshops and seminars (53%) </li></ul><ul><li>Case studies (46%) </li></ul><ul><li>Videos with discussion (41%) </li></ul>
  26. 26. Examples of Reductions <ul><li>An organization may obtain up to a five-point reduction in its culpability score </li></ul><ul><li>A two-point reduction is available for cooperation in the investigation and acceptance of responsibility </li></ul><ul><li>A one-point reduction will apply for acceptance of responsibility alone. </li></ul><ul><li>Culpability reductions of up to five-points are available based on effective compliance programs and are subject to negotiation </li></ul>
  27. 27. How to Avoid a Qui Tam or Whistleblower Action <ul><li>Create an atmosphere that encourages compliance </li></ul><ul><ul><li>Carrying the TORCH Awareness Champaign </li></ul></ul><ul><ul><li>Non-Retaliation Policy for Reporting </li></ul></ul><ul><ul><li>Provide training on why compliance and each workforce member’s role </li></ul></ul><ul><li>Set up a hotline </li></ul><ul><ul><li>Allows for anonymous reporting with follow-up </li></ul></ul><ul><ul><li>Demonstrate action and/or acknowledgement of a concern </li></ul></ul><ul><li>Listen to employees </li></ul>
  28. 28. What Are The 10 Modifications To the Guidelines? <ul><li>Tone At The Top </li></ul><ul><li>Conduct And Internal Control </li></ul><ul><li>Leadership Accountability </li></ul><ul><li>Resources and Authority </li></ul><ul><li>History of Violations </li></ul><ul><li>Conduct Training </li></ul><ul><li>Evaluate Programs </li></ul><ul><li>Risk Assessment </li></ul><ul><li>Encourage Employees </li></ul><ul><li>Whistleblower System </li></ul>
  29. 29. Impact of Guidelines <ul><li>&quot;...a clear picture of what a compliance program should look like and a set of instructions on how to construct a program.&quot; </li></ul><ul><li>&quot;…certainly, the guidelines are having a significant impact on what organizations are doing to prevent and detect violations of law&quot; </li></ul>
  30. 30. Conclusion
  31. 31. Questions & Answers Slides Prepared by Nazish Sohail