Assessing an ethics and compliance program.

• Author: Durree, Jim
• Position: Ethics Corner

* The Department of Justice on Feb. 8 released guidance entitled, "Evaluation of Corporate Compliance Programs," which provides insight into how it evaluates the effectiveness of corporate compliance programs as the result of an investigation.

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Although the department is reluctant to be precise about how it conducts evaluations, the recent guidance does provide a list of common topics and questions to expect if programs ever come under that level of scrutiny.

Without repeating all the points made in the guidance, there is one notable passage worth examining: "Continuous improvement, periodic testing and review: A company should be ready to discuss how it reviews and assesses the compliance program on an ongoing basis, including what, if any, internal audits or reports were conducted, how those were reported to management and what is the company's process to continually monitor the compliance program."

Whether a company's ethics-and-compliance program has recently been formalized or the company has a mature system, an independent, third-party review is a good way to get an expert perspective about developments in the industry and insight into best practices. It also becomes a good test, external and independent, about the company's culture of compliance.

There is always room for improvement in a compliance system and it is challenging to keep these programs fresh. One way to get objective feedback and input is by engaging an ethics-and-compliance expert to perform a benchmarking review of the company's current system.

Completing a benchmarking exercise should also reinvigorate the company's risk assessment process. It is important to consider the ethics-and-compliance risks specific to the company as the design and structure of the overall program are reviewed. For Jacobs, it was productive to use the benchmarking firm to conduct interviews of a diverse selection of functional and operational leaders to probe their views on the ethics and compliance risks in their part of the organization. Surveys can also be used to collect data from a larger population of managers.

One of the biggest challenges for a benchmarking review is finding the right expert to perform the work, as there is a plethora of firms available, but ultimately cost is the biggest consideration related to scope and expert selection. Jacobs interviewed four law firms with excellent credentials and ultimately selected a firm previously used by the company...