Every board of directors need a true compliance expert sitting on their board. Almost every board has a former chief financial officer, former head of internal audit, or persons with a similar background, and often times these are also the audit committee members of the board. Such a background brings a level of sophistication, training, and subject matter expertise that can help all companies with their financial reporting and other finance-based issues. So why is there not such compliance subject matter expertise at the board level?
An arm of the U.S. government has recognized the need for such expertise at the board level. In 2015, the Office of Inspector General (OIG) called for greater compliance expertise at the board level. The presence of a such a compliance professional with subject matter expertise on the board sends a strong message about the organization’s commitment to compliance, provides a valuable resource to other board members, and helps the Board better fulfill its oversight obligations.
Mike Volkov looked at it from both a practical and business perspective and has stated, “I have witnessed firsthand that companies that have a board member with compliance expertise usually have a more aggressive and effective compliance program. In this situation, a chief compliance officer has to answer to the board for the company’s compliance program, while receiving the resources and support to accomplish compliance tasks.”
Roy Snell sees it through the prism of the compliance profession and has said, “If you ask most companies if they have compliance expertise on their board … most would say yes. When asked who the compliance expert is they typically point to a lawyer, auditor, risk manager, or an ethicist. None of these professions are automatically compliance experts. All lawyers have different specialties.” What the regulators want to see is specific compliance expertise at the board level, someone with compliance program management expertise.
Putting a board member with specific compliance expertise, on a board level compliance committee, can provide a level of oversight and commitment to achieving the goal of operationalizing compliance in an organization. It will not be long before the Justice Department and Securities and Exchange Commision begin to require this step in any Foreign Corrupt Practices Act enforcement action resolution. This means that when your company is evaluated, under the factors set out in Prong Three of the FCPA Pilot Program and the Evaluation of Corporate Compliance Programs, you need to have not only the structure of the board level compliance committee but also the specific subject matter expertise on the Board and on that committee.