Compliance can make the difference between running your business uninhibited and having your operating license revoked. Compliance risks can shut down an otherwise successful enterprise. To mitigate against these risks, multinational corporations have large dedicated compliance, risk management and legal departments.
Smaller businesses may not afford to have a compliance department or even a full-time compliance officer but the role will often be assigned as an additional responsibility to one employee. Regardless of the specific nature of the compliance role, a compliance officer is unlikely to succeed if they are not provided with the right tools to do the job.
Here are some of the most important ways a business can empower its compliance staff.
1. Access to Regulatory News
A compliance officer must always be in the know of regulatory news in order to stay abreast of the constantly changing compliance environment. In the US, that means keeping an eye on any relevant announcements and information from the IRS, the Department of Justice, Department of Health and Human Services, Medicare & Medicaid, the Office of Civil Rights, Food and Drug Administration etc.
The information may be in the form of new laws & regulations, white papers, guidance pronouncements, audit findings, fraud alerts and enforcement actions. The more versed a compliance officer is on the current regulatory environment, the better prepared they will be to translate new regulatory developments for their organization. Overall, the compliance officer should be the principal internal resource for regulatory news.
2. An Ethics Hotline
An ethics hotline can be a powerful and independent source of raw unfiltered intelligence and information from all levels of the organization. It can help pick out system weaknesses as well as identify potential wrongdoers before costly liabilities are incurred.
The board and senior management of the business may be personally implicated by information shared through the hotline. Ergo, it’s best practice when this communication channel is externally operated and remains open 24/7. The hotline should be regularly evaluated for effectiveness.
Any tips and leads received through the ethics hotline should be acted upon efficiently and promptly. Failure to address the complaints sent through in a timely fashion may eventually see the whistleblowers become informants for the Department of Justice, a scenario no organization would be keen on.
3. Compliance Audits
Whereas an ethics hotline is a useful avenue for knowing what could be going wrong, a compliance officer cannot depend on it for their sole source of compliance information. Ongoing compliance audits are a more proactive means of gathering solid documented intelligence about the organization’s systems and operations. For example, in a mom-and-pop store, a compliance audit may involve establishing that no one is selling cigarettes to minors.
Issues raised during the audits can be added to a tracker for timely resolution. Compliance audits shouldn’t be seen as an opportunity to reprimand line managers. Rather, the audit can create a valuable forum through which the compliance officer can provide assistance and share their knowledge. After all, the compliance officer’s primary role isn’t to catch noncompliance but to prevent noncompliance in the first place.
4. Compliance Awareness
Plenty of compliance problems that organizations face come down to employee ignorance. The role of the compliance officer is to ensure the organization is operating within the relevant laws and regulations. However, a compliance officer isn’t in charge of the day to day processes of the business. That is the role of other managers and employees within the organization.
If employees don’t know what’s the right thing to do, they’ll at best increase the corrective workload of the compliance officer and at worst attract heavy-handed regulator enforcement. In fact, employee awareness is half the journey to a compliant organization. The awareness program should comprise mandatory annual compliance training for all employees as well as a knowledge survey to gauge employee attitude and understanding.
To achieve optimal empowerment, compliance officers must be equipped to become a useful resource to employees, managers, senior executives and the board. The business must see them as allies in risk management and thus an asset in achieving the company’s overall strategic goals.