An interesting aspect of a new DOJ document is how little it focuses on legal issues, but instead emphasizes how well compliance is woven into ongoing business operations.
For more than two decades, the effectiveness of corporations’ compliance programs has been a factor in federal agencies’ decisions whether to bring charges, assess penalties, or negotiate settlement agreements. Unfortunately, answers to the question of what constitutes an “effective” compliance program remain elusive because regulators make their determinations based on the facts and circumstances of each individual case.
There are, however, some common questions that prosecutors ask when judging the effectiveness of a compliance program, and the Fraud Section of the Criminal Division of the Department of Justice (DOJ), recently posted them on its website. The DOJ’s sample questions address the following types of issues:
- Analysis and remediation of misconduct
- Senior and middle management
- Autonomy and resources for the compliance department
- Policies and procedures
- Risk assessment
- Training and communications
- Confidential reporting and investigation
- Incentives and disciplinary measures
- Continuous improvement
- Third-party management
- Mergers and acquisitions
An interesting aspect of the DOJ document is how little it focuses on legal issues. Instead, the government is looking at how well compliance is woven into the ongoing business operations of the organization. By way of illustration, the word “board” appears seven times in the document, “training” eight, “management” eleven, and “process” twenty-nine times. In contrast, the word “law” is totally absent and “legal” appears only once. This emphasis underscores the point that although compliance addresses legal requirements, it is fundamentally a business function, not the practice of law.
The DOJ makes clear that its document is not a rigid formula or checklist. Nevertheless, it is a helpful guide that compliance officers, internal auditors, and legal counsel should have in mind while doing their regular self-assessments of compliance program effectiveness.
J. Stuart Showalter, JD, MFS, is a contributing editor for HFMA.