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Compliance and the board: Challenges and best practices

Brian D. Annulis (brian.annulis@ankura.com) is Senior Managing Director, Sarah M. Couture (sarah.couture@ankura.com) is Managing Director, and Kayla M. Teune (kayla.teune@ankura.com) is Senior Associate at Ankura in Chicago.

Chief compliance officers (CCOs) understand the importance of creating a culture that identifies and mitigates risks. In fact, not having a culture that timely identifies risks and escalates them was in the top 10 risks according to “Executive Perspectives on Top Risks in 2019.”[1] One of the first steps in establishing a compliant culture is educating and involving the governing body/board in compliance. Guidance documents from both the U.S. Department of Justice (DOJ)[2] and the U.S. Department of Health & Human Services Office of Inspector General (OIG)[3] discuss the importance of a culture of compliance being driven by organizational leaders, or “tone at the top,” and creating and fostering a culture of ethics and compliance with the law.[4] Additionally, the U.S. Federal Sentencing Guidelines indicate that the company’s “governing authority shall be knowledgeable about the content and operation of the compliance and ethics program and shall exercise reasonable oversight.”[5]

Although it is clear that board needs to be involved, it is common for CCOs to struggle with what the compliance–board relationship should look like in their organization. The reasons a CCO may have difficulty fostering a meaningful board relationship may include:

  • The CCO having limited access to the board in general;

  • Not knowing the best way to engage the board and help board members understand their compliance oversight responsibility;

  • Being unsure of the balance between information overload and not enough information when reporting to the board on the compliance program;

  • Being unsure of the best way to educate the board on compliance and which compliance topics should be included;

  • Lack of certainty as to whom to engage with on the board and how frequently;

  • Compliance may not be a priority in the organization, so the CCO may not get adequate time with the board; and

  • Compliance being looked at as a regulatory necessity to check the box vs. a valuable business partner that reinforces a positive corporate culture.

This article is intended to share a road map on how to effectively create and manage board engagement and interactions to strengthen your compliance program and overall corporate culture.

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