Kusserow on Compliance: DOJ issues 2020 compliance program guidelines

Provides a more in-depth analysis of compliance programs

The DOJ released the updated Evaluation of Corporate Compliance Programs to assist prosecutors in making an informed analysis about an organization’s compliance program at the time of charging decisions. It has not changed much from the prior releases that included a list of 119 compliance-related questions. The new guidance continues to focus on three core questions derived from the Justice Manual, namely,  whether a compliance program is “well designed,” “being applied earnestly and in good faith,” and “works in practice.” It restates the importance of having a compliance program suitable for the company’s risk profile but added context and detail for companies to ensure that their compliance priorities are aligned with the DOJ’s expectations.

These include: (1) the importance of having an evolving, dynamic program; (2) the need for the compliance function to engage with company employees; (3) ensuring the program is thoughtful and responsive to the company’s context; and (4) the importance of adequate compliance resources and empowerment of the compliance function. Additional attention is given to these principles for companies to enhance their compliance program and adhere to best practices that would best position themselves in the event of an inquiry or enforcement action from a government regulator. It reflects the continued expectation that a compliance program should continue to evolve and improve over time as the business changes and the compliance function matures. Meaningful risk assessments and program evaluations are critical to this end. There is added language asking prosecutors to assess “why and how the company’s compliance program has evolved over time” and “has the periodic review led to updates in policies, procedures, and controls?”

The DOJ has continued to move away from the antiquated model of a generic, “off-the-shelf” compliance program and focus more on how an organization acts in response to risk assessments. Other questions include whether the company has a process for tracking and incorporating into its periodic risk assessment lessons learned either from the company’s own prior identified issues or from those of other companies operating in the same industry and/or geographical region. The DOJ asks about effective monitoring of compliance and whether a company’s compliance program has continuous access to operational data and information across functions. The DOJ underscores, once again, the importance of having regular reviews of the compliance program; and make it clear that this should not be “cookie cutter” “check the box” type reviews. These reviews should lead to useful findings that result in meaningful changes and improvements. Greater emphasis is also given to the adequacy of compliance resources, quality of trained staff, and empowerment for the program. The importance of oversight of any third-party agents that act on a company’s behalf is stressed, including whether the company engages in risk management of third parties throughout the lifespan of the relationship. The questions include whether the company completed pre-ad post-acquisition due diligence; and a process for timely and orderly integration of the acquired entity into existing compliance program structures and internal controls.

The guidance asks whether the company tracks access to various policies and procedures to understand what policies are attracting more attention from relevant employees; and if the policies have been published in a searchable format for easy access and reference. Employee training received new attention, suggesting companies consider the format of their trainings to be more responsive, including by: (1) investing in shorter, more targeted training sessions, and (2) ensuring a process by which employees can ask questions arising out of the training. In addition, there is the question as to the extent to which the training has an impact on employee behavior or operations. With regards to the hotlines, the guidance had added language to ensure that the hotline is an accessible, responsive tool, whether the company test whether employees are aware of the hotline and feel comfortable using it, and if reports are tracked from inception to finish.

 

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2020 Strategic Management Services, LLC. Published with permission.