In this five-part podcast series, sponsored by Affiliated Monitors, Inc. (AMI); I am joined by AMI Managing Director Rod Grandon. We have considered the responsibility of federal contractors to maintain their status as “Responsible Contractors” and explore the benefits of having an effective compliance and business ethics program to not only increase business efficiencies and profitability but prepare you in good stead if the regulators come knocking. In this final episode, we consider how you can keep your compliance program fresh through ongoing monitoring.
To gain a better understanding of the effectiveness of corporate ethics and compliance efforts and to identify any gaps in the program’s scope, contractors are well advised to commit to an objective assessment of their ethical culture and ethics and compliance programs before a crisis occurs. Grandon stated, “part of the requirement for an ethics compliance program is that the contractor will conduct periodic reviews of the company’s business practices, procedures, policies, and internal controls for compliance with the Contractors Code of business ethics and conduct and the requirements associated with federal contracting.” Contractors should consider carefully whether the assessment can be performed using in-house resources, or whether the assessment should be performed by an independent and objective outside organization.
These reviews include monitoring and auditing and periodic evaluation of the effectiveness of the infrastructure and the efforts that are in place. But more than simply testing the ethics and compliance programs, companies and contractors need to be aware of the operational risks and business risks so that policies, procedures and internal controls can be aligned to address and ideally, mitigate or reduce the impact of misconduct in the workforce. Grandon concluded, “it comes down to being diligent and ensuring that whatever is put in place is effective.”
It is in this space that obtaining internally unbiased and useful information about the effectiveness of a company’s compliance program, and the strength of a corporate ethical culture, can be challenging. Grandon noted, “internal or external audits may not effectively conduct a comprehensive review of a company’s overall compliance infrastructure or ethical culture, as that is not how those functions are structured. Furthermore, asking the managers responsible for implementing the program to evaluate their own effectiveness or success carries certain inherent conflicts.” Finally, “even if such a self-evaluation mechanism is established, getting honest answers from employees who may fear retaliation from their superiors is likely to be difficult and can lead to skewed results.”
This assessment approach positions a contractor to learn about the effectiveness of the company’s training programs; the awareness of any communication or whistle-blower hotline channels available to them; and to assess staff-level comfort in raising issues and questions and whether their input is taken seriously. Once an ethics and compliance assessment is complete and the analysis digested, the company should have a detailed a roadmap for improving the effectiveness of its program. The roadmap should highlight opportunities for making appropriate investments to better position the contractor to manage and minimize the risks of misconduct occurring and to proactively discover matters that should be self-reported to government regulators. The roadmap will help companies determine where corporate budgets and resources should be targeted to achieve maximum value to the company.
An independent, outside reviewer would in their report create a roadmap that a company could use to remediate any deficiencies if new risks had arisen, either in markets, products or services that could be used as a documented roadmap if a regulator ever came knocking. The company could show such regulator that “yes, we not only reviewed our program, but we have a roadmap and here are the steps we are taking based upon this roadmap to move forward into the future.”
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