Board of Directors and Line of Sight Into Compliance Trends

The more one thinks about anti-corruption compliance the more it is clear how each part of a corporation has role in such compliance. This is because, unlike the legal function, which will almost always stand separate and apart from other corporate disciplines, the role of compliance should be more integrated into an organization.

A board of directors must set the appropriate tone at the top for any organization. Yet it must do more than simply set the tone, sit back and do nothing. A board needs to take a hard look at the information it is being presented and tell management to stop if the executives are walking up to a line over which they could cross into illegal conduct. Enron is but one notorious example, where the CFO presented off the books information to the board. Apparently no one on the board thought to say stop or even wait a minute.

Yet corporate culture is more than simply numbers on a spreadsheet, even if the spreadsheet is tying the corporation to illegal or unethical conduct. There are usually signs when an employee is moving in a non-compliant direction. Things like expense-reporting tardiness or even expense reimbursement abuse are signs that need to be addressed before they move into something more nefarious.

How can a board spot trends, which might give them some insight into areas where the company might be moving towards a FCPA violation? Usually a board will only want to know something, if it is material in a financial sense. Here is where transaction monitoring can come into play tying sales results to a meaningful analysis for any board.

If there is a spike in sales, the board should ask questions about how such an increase occurred. If a company’s products increase so dramatically that it drives one province to the top of a country’s sales and then drives that same country up in sales in a region this merits the board’s attention.

It is only through this line of sight that allows not only the compliance function to spot such trends but also the company’s governance oversight as well.