Maintaining compliance during the turmoil.

• Author: Heffes, Ellen M.
• Position: LEGAL ISSUES

Sharie A. Brown, a partner in the litigation practice of law firm DLA Piper LLP, expects that within two years, numerous companies will be investigated for financial crimes, corruption and fraud, as the financial crisis causes some firms to operate with fewer compliance resources.

Brown advises senior managers to help their firms avoid that fate by giving attention to the following four areas:

1. Reinforce Lawful Business Conduct and Effective Internal Controls. Senior managers should meet with their compliance officers and internal auditors to reassess compliance and control risks in light of the demands created by the financial crisis.

   Chief executives and chief financial officers should directly communicate as a component of all business goals the need to maintain effective internal controls and legal-compliance systems. Compliance and ethics Web sites should be updated and effective employee and third-party training should continue.

2. Avoid 'Short-hand' Communications that Signal Less Commitment to Compliance and Internal Controls. During a crisis, managers often provide "short-hand" instructions without realizing that they may be a signal of lessened commitment to legal compliance and adherence to internal controls.

   Risky statements can include: "Just get it done." "Do not bother me with the usual details." "We can't survive without this." "You don't need to run it by legal." "We must get this deal." or "Pay this without Tom's signature because he is busy with the crisis work team."

   Employees under pressure may interpret these as allowing evasion of internal controls. Careful instructions will decrease legal risks for managers...