Does the Corporation’s Compliance Program Work in Practice?

The crux on this third phase of the Department of Justice’s (“DOJ”) analysis on the effectiveness of compliance programs is not only an organization’s focus on the right things from the outset, but also on the program’s ability to evolve and adapt as issues are identified. Not all compliance issues can be prevented, and the DOJ says as much. What differentiates an effective program from one that is not effective is whether or not the organization focused its efforts on high-risk areas from the outset, and whether it responded appropriately (halt, remediate, self-report) to the compliance issue identified, even where the risk wasn’t prioritized. Another big focus under this segment of analysis is whether the organization fully evaluated the noncompliance by performing a root cause analysis to identify where existing controls failed or were missing, what compliance culture barriers exist that are contributing to the noncompliance, and implemented improved controls to prevent a similar problem in the future.

Finally, the guidance advises on the importance of the continuous evaluation and modification of an organization’s risk assessment and program.  How has the identified noncompliance shaped the ongoing monitoring and auditing within the compliance program? How has the culture of compliance been restated and promoted as a result of the identified noncompliance? All of this contributes to the review of the effectiveness of an organization’s compliance program by the DOJ not only at the time of the identified noncompliance but also at the time of the charging decision. Just as judges use the Federal Sentencing Guidelines in determining whether an organization is entitled to mitigation credit for having an effective compliance program in place, prosecutors use the DOJ guidance to decide whether to bring charges or negotiate pleas or other agreements when investigating an organization. For additional information, please see our white paper Compliance Program Effectiveness.

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