Effective Compliance Programs

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Elements of a Compliance Program

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Effective Compliance Programs

  1. 1. 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
  2. 2. 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
  3. 3. 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
  4. 4. 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
  5. 5. 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
  6. 6. 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

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