Corporate Compliance Matters
Doing business inNew YorkStatehas it challenges. There are a plethora of many statutory rules, regulations and mandates for business organizations ranging from manufacturers, healthcare providers, services industry, among others. Many of us are aware of state and federal agencies such as NYSDOL, EPA, CMS, OSHA, NYSOMIG, as examples, but the overall trend is that the federal and state government has increased their surveys and investigations. In response, a number of firms have or are developing plans to make corporate compliance a part of their company culture.
Why are organizations looking to have their own corporate compliance or ethics plan? Whether a firm is a manufacturer or services, for-profit or not-for-profit, small or large, it represents an opportunity to put together, in one document, a written plan of expectations of the firm’s mission, goals and conduct of its employees and to show government regulators that they are acting in good faith to have such a plan in order to detect and eliminate waste, fraud and abuse within their own firms.
It is important to also consider having your own compliance plan especially if you receive government reimbursements. Even if you are not direct recipient of federal or state monies, the compliance plan may be a factor in helping your company to be a victim of someone else’ waste, fraud and abuse. According to the Association of Certified Fraud Examiners, the typical firm loses 5 to 6% of annual revenues to fraud. A good compliance program can reduce that expense risk, re-enforce your business mission, enhance communications, ensure good practices and help detect and identify areas to reduce and remove wasteful business activities.
The growth is compliance programs took a sharp turn upward with the federal and state adoption of the False Claims Act of 2007 and its whistleblower provisions. Since this became effective over two years ago, there has been additional legislation from both the federal and state level, such as last year’s health care reform act. Compliance plans, also known as Integrity, Ethics or Corporate Responsibility, provide businesses the best opportunity to thrive and prosper. Companies who self-report, cooperate with the government and have an effective compliance plan can receive a major reduction in fines of up to 95% under federal sentencing guidelines. For this reason, these plans have caught the attention of many firms whether in manufacturing, healthcare or other industries.
Compliance plans are best known as a series of codes of conduct for all employees including board of directors, management and vendors. These are policies and procedures that form the core structure of an organization in tandem with the firm’s mission and vision. It also acts as a way to resolve work issues of concern promptly. The cost for firms to develop or refine their compliance, especially small firms, does not have to be expensive. There are plenty of resources available but the guidance of a professional is suggested in order to save time and money.
What are some of the key ingredients of an active and effective corporate compliance plan? Having been in manufacturing for seventeen years and working with compliance and ethical matters for over twenty, and from government sources, here are some essentials:
Leadership from the Top: The organization endorsement and active support is crucial. It sets the tone and encourages participation.
- Documentation: Have the plan in writing for all to see and review and update it at least one a year.
- Compliance Integrity Officer: Assign an employee as the compliance officer, who must be properly trained and credentialed, in order to identify practices that may be costly to the firm.
- Training: Educate and train employees and all stakeholders of the company regularly in order to be prepared for government inquiries or surveys.
- Communication: Technology advancements has given us smart phones, iPads, iPhones, etc. but face-to-face meetings are still important. Have a separate office and phone line to discuss topics and encourage contact.
- Social Media: Have written policies regarding the use of any company information especially when it involves LinkedIn, Twitter, Facebook, etc.
- Disciplinary Component: encourage good faith participation by having the compliance plan a part of an employee evaluation.
- Identify Risk: Regularly self-evaluate areas with audits, reporting, conflicts of interest, governance, credentialing, quality assurance and the like.
- Risk Response: When an issue surfaces, have a response system ready to act promptly.
- Non-Retaliation: Assure your employees that by coming forth to the compliance office that it will not result in any retaliation or intimidation.
Compliance programs are reliant upon people for its success. It needs to be pro-active and embraced by from the organization’s leaders in order to identify the risk areas. By doing so, it can result in early resolution of issues, track unfavorable trends or patterns, enhance communication and reduce costs.
Michael A. Smith is a credentialed Certified Compliance Executive. He is a Senior Advisor with the Compliance Resource Group, Inc., consultant, author and lives in Orange County. Mike has also served as a compliance executive in both the healthcare and defense industries, for-profit and non-for-profits. He can be reached at 914-850-6159 or visit his website at www.corporatecomplianceplans.com