Scarinci Hollenbeck, LLC
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Author: Scarinci Hollenbeck, LLC
Date: August 24, 2018
The Firm
201-896-4100 info@sh-law.comEven the most successful and well-managed business is not immune to compliance failure. Whether it’s a data breach that could have been prevented or an employee complaint that was mismanaged, companies should always view missteps as a learning opportunity. After all, that’s the most effective way to prevent similar mistakes in the future.
While it may make sense, many companies neglect to do a “deep dive” following a compliance failure. According to a recent report, “What’s the Tone at the Very Top? The Role of Boards in Overseeing Corporate Ethics and Compliance,” released by consulting firm LRN Corp., compliance still doesn’t get the attention that it deserves from corporate boards, even after something goes wrong.
A staggering 40 percent of the former chief ethics and compliance officers who were surveyed reported that their corporate boards did not conduct an in-depth investigation into the root cause following compliance failures and scandals. Many also don’t regularly assess their culture of compliance. “We don’t do culture diagnosis. Management and the board think they know the company culture but then are offended and surprised when something goes wrong,” one compliance officer stated.
In 2017, the Department of Justice’s Criminal Division (DOJ) provided several important sample questions that its Fraud Section considers when evaluating a corporate compliance program. While the DOJ cautioned that the document should not serve as a “checklist,” it serves as an extremely useful starting point when evaluating the compliance issues that may have contributed to workplace misconduct or another compliance issue. Below are several examples:
Of course, this post provides a brief summary. The DOJ guidance includes additional questions that can help businesses evaluate the effectiveness of their compliance programs.
Even before a lapse occurs, it is imperative for businesses to regularly assess and test the effectiveness of their policies and procedures. At Scarinci and Hollenbeck, our business attorneys regularly assist companies of all sizes in conducting compliance audits and remedying any weaknesses that are detected.
If you have any questions or if you would like to discuss the matter further, please contact me, Charles Yuen, at 201-806-3364.
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