by Donna Boehme
Excerpted from The Complete Compliance and Ethics Manual, 2nd Edition; Copyright 2010, Society of Corporate Compliance and Ethics. Reprinted with permission.
Board engagement, training and reporting is a critical but often overlooked area of practice for the chief ethics and compliance officer (CECO). In 20+ years of practicing in the field, both as in-house CECO and outside advisor, I’ve encountered countless programs that have, on paper, all the elements of an effective program, as envisioned by the US Federal Sentencing Guidelines (FSG) and other standards. Many of these programs are implemented with the best of intentions and feature most, if not all, the FSG bells and whistles. Yet so many lack the key foundational components necessary to make those programs actually work as intended: active, knowledgeable Board engagement and a visible mandate from the top of the organization. Little practical advice has been offered about engaging, training and reporting to the Board, for the likely reason that most CECOs are struggling just to get some face time on the Board (or Audit Committee) agenda, and the profession is in a learning curve with rapidly evolving practice in this space. At the same time, a number of high-profile settlements and important policy developments have bolstered the case for heightened Board oversight through direct, unfiltered reporting by CECOs to the governing authority. A recent RAND Symposium,Directors as Guardians of Compliance and Ethics within the Corporate Citadel: What the Policy Community Should Know (RAND Directors Symposium), explored the role of director oversight of compliance and ethics, with some important takeaways on the state of Board readiness and education. Notably, a 2009 Report of the NACD Blue Ribbon Commission, Risk Governance: Balancing Risk and Reward, finds that 51.6% of directors surveyed named “[D]irectors’ understanding of how to execute risk oversight” to be their top challenge. However, despite the increased expectations on Board oversight for compliance and ethics, a 2009 survey of 1,600 Association of Corporate Counsel members found that:
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