The importance of a robust third-party compliance program

7 minute read

Each year, companies devote vast financial, technical, and staffing resources to implement and maintain effective corporate compliance programs. Generally, an effective compliance program has seven essential elements, including standards, policies, and procedures; compliance program administration; screening and evaluation of employees, vendors, and other agents; communication, education, and training; monitoring, auditing, and reporting; discipline for noncompliance; and investigations and remedial measures.[1] For example, American hospitals spend almost $39 billion annually on regulatory compliance activities.[2] Understandably, most compliance work is focused on a company’s internal business operations, including ensuring that the company’s employees are familiar with applicable policies and procedures; receive regular training; know how to report compliance concerns; and that there is a process in place to investigate and resolve compliance concerns and complaints.

But increasingly, companies are turning their compliance focus to include a more robust examination of a company’s third-party vendor relationships because there is growing recognition that third-party vendors can introduce significant compliance risk into a company’s business environment. This renewed focus is reasonable considering the increased interest regulators are showing concerning third-party relationships. Indeed, the U.S. Department of Justice has issued explicit guidance that called out third-party management as an essential feature of a well-designed corporate compliance program.[3] Therefore, it is important that companies take steps to ensure that their existing compliance programs comport with the current guidance for what constitutes an effective third-party compliance program.

This document is only available to members. Please log in or become a member.
 


Would you like to read this entire article?

If you already subscribe to this publication, just log in. If not, let us send you an email with a link that will allow you to read the entire article for free. Just complete the following form.

* required field