FCPA compliance is one of the most important parts of any business operations. Without this compliance, you risk facing a myriad of legal actions—including heavy fines. Even more, compliance does not end at top management. Even directors have a big role to play when it comes to securing compliance. According to the stats, numerous independent directors have been sued by the SEC on matters of compliance. Not undertaking your oversight responsibilities can land you in trouble. That’s why most independent directors often find themselves named as defendants in lawsuits. In a nutshell, directors have a huge role to play when it comes to FCPA compliance. In this guide to FCPA compliance, you are going to learn about the top questions directors should ask as far as FCPA compliance is concerned.
Consider Embracing Effective Communication
The FCPA guidelines mandate that an organization shall promote a culture that encourages ethical conduct, as well as, a commitment to comply with the law. The company should explicitly encourage ethical conduct and create an appropriate “corporate culture”. Plus, the management team should reinforce the company’s corporate culture by implementing a compliance program with appropriate standards of behavior.
If the upper management fails to act ethically, the directors shouldn’t tolerate them. Company directors should clearly understand senior management’s efforts to constantly discuss company values and ethics. It’s also their duty to ensure that the top management guide and empowers the middle management to resolve ethical issues. Just like financial performance, ethical performance should be treated with the seriousness it deserves.
Assessing Your FCPA Risk Is Key
Any effective compliance program should observe strict risk assessment measures. Essentially, an appropriate risk assessment strategy entails setting objectives, identifying potential risks, and evaluating those risks, as well as, the performance of related controls.
In particular, FCPA risk assessment requires that a company considers where it does business. If you’re pursuing business in Nigeria, for instance, you must view compliance differently from a company conducting business in a nation with lower corruption risk. It’s also important that you consider whom you do business with. If your company seeks business from a foreign government, then you’re more likely to trigger increased FCPA concerns. A company that utilizes sales agents also introduces an additional level of risk, which must be ready to address.
Consider Establishing Reasonable Standards, Controls, and Policies
As a company, you should always have written standards and policies to guide employees, as well as, sales agents. According to FCPA, a company must have a written code of conduct that emphasizes its core ethical values. So, make sure that you have got a specific FCPA policy that’s well-documented and regularly updated. Plus, it should be tailored to actual operating risks.
Generally speaking, a sound FCPA policy clearly explains the law and provides guidance on permissible behavior. Moreover, the policy will also provide guidelines for facilitating payments, travel, entertainment, gift-giving, as well as, charitable contribution.
Properly Implement Your FCPA Policy
The principles of FCPA expressly contemplate that prosecutors should always attempt to determine if a company’s compliance program is merely a ‘piece of paper’ or if it’s designed and implemented appropriately.
As a director, you should carefully determine which employees receive training. A sound FCPA compliance program will inevitably recognize that most areas of the company, including the sales force and those involved in the accounts payable function, have a role in implementing the initiative.
Even more, the risk assessment might also mandate that the company trains some third-party business partners, agents, as well as consultants. Always make sure that the trainers are qualified and experienced. One size might not fit everyone. Remember, the goal of an FCPA training program isn’t to create a group of FCPA experts. Instead, it should strive to ensure that every employee has sufficient knowledge to identify and report any dangers within their area of responsibility.
Have A Good Training Approach In Place
It’s also important to ensure that the training is effective. A meaningful training assessment typically includes a ‘test’ during and at the end of the training. This will help you determine if the employees have grasped the required concepts. Plus, grading the tests also provides important feedback regarding the relevance of the training materials. There are various vendors who’re available to help with FCPA training and assessment. So, if you can’t do it yourself, you can always count on these individuals to help.
Effective Monitoring and Auditing Are Key
The FCPA states that every corporation shall take reasonable steps to make sure that the company’s compliance and ethics program is strictly followed. Proper monitoring and auditing should be done to detect criminal conduct.
Monitoring is an ongoing activity that’s embedded directly into control systems. It can include regular management activities such as worksite, employee interviews, as well as, document inspections. Audit-style testing, on the other hand, is less frequent and inclined towards back-testing of compliance requirements. They’re both important aspects of an effective FCPA compliance program.
FCPA Program Success Checklist
If you want your FCPA program to succeed, you must get your strategies right. For instance, you should have adequate controls in place. Things like internal audits are important components you shouldn’t ignore. Plus, you must train your staff on the importance of FCPA compliance. Communication should be your ultimate tool. Everything should be communicated in a clear and concise way. Don’t issue memos that are in jargon. Make things simple. Also, learn about FCPA compliance. Sign up for newsletters from organizations that deal with FCPA compliance. Also, you can join relevant body organizations. Attend seminars. These are the things that can guarantee you success when it comes to FCPA compliance.
Conclusion
FCPA-related prosecutions and enforcement actions are increasingly in the headlines. The DOJ and the SEC have been levying huge fines and prosecuting dozens of individuals. Organizations need to minimize this risk by implementing strong FCPA compliance programs. And directors are key players in that process. They need to exercise reasonable oversight by paying close attention to the implementation of an effective FCPA compliance program. The above guide provides helpful tips on how to implement a successful compliance program. Good luck!
