Compliance Experts Assess Your Corporate Compliance Program

Protecting your company when its agents and officers violate the law

Organizations are more often hurt by internal misconduct than by outside forces. Yet, most executives are so focused on actions taken by their competitors, changes in the marketplace, and the overall economic climate, that they neglect problems within their own walls. One of the major problems is noncompliance with important regulations, which exposes the company to criminal and civil penalties. In recent years, prominent companies have faced prosecution, including Volkswagen for emissions testing fraud, Wells Fargo for deceptive sales practices, and Uber for consumer privacy violations. What would become of your company if unethical practices caught the attention of the U.S. Department of Justice? Would your company be able to withstand the full weight of the law and its strictest penalties? Fortunately, there is a way to protect your organization, and North American Forensic Accounting is prepared to help.

Qualifying for lenient treatment under Federal Sentencing Guidelines Chapter 8

Because corporate compliance programs can deter the type of deviant behavior that leads to noncompliance, the federal government has provided an incentive for companies to adopt such programs. This means that if your company has designed and implemented an effective, qualifying corporate compliance program, your company could be eligible for lenient sentencing even if the DOJ finds that you broke the law. NAFA provides companies with the knowledge and tools to create effective, qualifying programs that can curtail criminal activity by their agents and shield the company from the worst consequences when that activity comes to light.

Understanding Federal Sentencing Guidelines Chapter 8

The U.S. Congress created The United States Sentencing Commission In 1984 to serve as an independent agency of the judicial branch of the federal government. USSC was charged with establishing sentencing guidelines for the U.S. federal courts. Federal Sentencing Guidelines Chapter 8 lists recommendations for sentencing companies that have committed a federal offense. The key question for sentencing is whether the guilty officer(s) of the company were rogue agents violating company policies or acting in furtherance of an approved scheme. In the former case, the officers would be culpable individually, but the company itself would be mostly innocent. In the latter case, the convicted officers would be mere agents of the guilty company, so the federal court could impose crushing fines that could permanently damage the business. To determine individual versus collective guilt, the federal court looks at the company’s compliance program. The design, implementation and commitment to the plan says a great deal about whether the company cared if its officers behaved ethically, or was willing to put profits above adherence to the law. The mere existence of a paper compliance program is not sufficient to earn lenient treatment. The U.S. DoJ lists three “fundamental questions“ a prosecutor must ask before recommending sentencing:

  • “Is the corporation’s compliance program well designed? “
  • “Is the program being applied earnestly and in good faith? “
  • “Does the corporation’s compliance program work “in practice?

NAFA helps companies design, implement, and test their compliance programs. We show you how to collect the data that will prove your compliance program was legitimate, so you can qualify for lenient sentencing.

Designing and implementing your corporate compliance program

Before starting to design your compliance program, you must understand where your company’s risks of noncompliance lie. These risks are often industry specific, e.g., a manufacturer might face pressure to compromise on environmental standards, a securities brokerage or a publicly traded company could fall prey to insider trading, etc. Drawing on industry-specific knowledge, NAFA can help you assess your risks thoroughly. Then we can show you how to establish safeguards, allocate resources to manage your risks, and revise your controls regularly when presented with new information. We can help you draft policies and procedures, which should include a Code of Ethics that articulates your company’s commitment to strict compliance. Finally, your HR department must train employees on your compliance program, explaining incentives and deterrents built into the program. HR must also establish processes for reporting, investigating and disciplining employees for violations. The effectiveness of the program must also be measured. Management must demonstrate by words and deeds their commitment to strict compliance. Your personnel who supervise compliance daily must be personally qualified and given adequate resources to do the job. They must also have the authority to act. This requires a measure of autonomy and direct access to your board of directors.

Testing the controls in your corporate compliance program

NAFA instructs companies on a variety of methods that measure the effectiveness of a compliance program, and we recommend that companies utilize all of them. Your internal audit department plays a crucial role in testing your controls, but it’s up to management to use the data presented to improve controls. Management must also act decisively on evidence of misconduct, remediating the problem with a timely and thorough investigation that accords due process to all parties, and does not shy away from disciplining at-fault workers at any level.

Contact North American Forensic Accounting to discuss your corporate compliance program

North American Forensic Accounting helps companies of all sizes develop compliance programs that discourage employee misconduct and insulate the company from liability. To learn more, call us at 347-286-4860 or contact one of our offices online to schedule an appointment. NAFA serves clients from offices throughout the United States, including in Philadelphia, Pittsburgh, New York City, Atlanta, Charlotte, Miami, and the Tampa Bay Area.