We hope you are enjoying this building-block series of articles which started in 2013.  If you are joining us for the first time, please check out previous compliance blogs.  If you are seeking a full comprehensive guide, view RevSpring’s webinar – Building a Transformational Compliance Program.

Element #3 – Standards of Conduct/Policies & Procedures

An organization must have standards of conduct and internal controls reasonably capable of reducing the likelihood of criminal and other improper conduct.

The foundation of these controls should be the Standards of Conduct. The standards should contain an overall description of the compliance program, identify clear channels for reporting misconduct or violations of the code, and make clear that disciplinary action will be taken if an employee violates the standards.

In addition to the standards of conduct, an organization needs to have more specific policies and procedures to provide detailed guidance on the approach the organization wants employees to follow, or avoid, in its business relationships.

The following core components comprise the 3rd element of an effective compliance program:

1)      Development – policies are your in-house general guidance for those complicated rules, regulations, and laws. Don’t make them too long or too complex. Procedures are meant to take policies and apply them to specific departments – those are more detailed.

2)      Location – are they easily accessible?

  1. Where can you find the policies – are they easy to find? Centrally located?

3)      Current and applicable to your business needs – do they actually apply to the regulatory requirements that cover your business?  Are they effective – do employees actually find the policies helpful in performing their duties?

4)      How do you maintain them?

  1. Do you have a formal review and approval process – Create a policy approval process in order to initiate consistent education on new and updated policies. What is your review frequency? Annually, every 2 years, every 3 years?
  2. Do you have clearly labeled policy footers for version/control?  (Quality process rules the day.)
  3. Do you have a matrix for all policies? (Owners/authors/latest revision date, etc.)
  4. When a new policy comes out or is updated, remember to communicate it to all staff.

5)      Standards of Conduct

Standards of conduct is a company’s internal constitution, offering a common framework and rules for employees on how to do their jobs within the company’s vision.  Distribution is a fundamental expectation and can be manual or electronic.  You’ll need to ensure all employees acknowledge its existence, and that every employee must abide by the standards of your organization and are trained.

For a comprehensive list of basic policies needed for an effective compliance and ethics program, please check out this link to the Society of Corporate Compliance & Ethics website.  This specification list is a great resource whether you are starting a program from scratch or assessing current gaps in your existing program.

Our next post will take a detailed look at Training and Education…stay tuned!

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