How to Implement a Corporate Compliance Plan

How to Implement a Corporate Compliance Plan

Ever since the United States government started heavily regulating various industries, it has become crucial to stay compliant. While many small businesses only have to play by a few rules, larger organizations have to develop complete corporate compliance plans. 

To follow all the applicable laws, including federal laws, state laws, and local laws, you need an effective corporate compliance plan, along with compliance policies, training programs, and an effective compliance program. 

In this article, we’ll go over what a corporate compliance plan is and how you can develop and implement it effectively. 

Let’s dive right in. 

What is a Corporate Compliance Plan? Why is it Important? 

The compliance world is constantly changing with new laws like GDPR, HIPAA, False Claims Act, and CCPA being introduced. Simultaneously, the level of scrutiny on whether companies are following rules and regulations is also increasing. 

Therefore, each organization can launch a corporate compliance program to ensure it complies with all relevant laws and regulations. 

With so many new organizations coming up every day, you can’t expect good faith and ethical practices from all of them. Therefore, it’s critical to have local, state, and federal laws governing each company and maintaining ethical conduct. While determining the ethical standards for fair business practice can take some trial and error, it’s much easier to maintain ethical behavior. 

Every company requires complete regulatory reporting to ensure there is no noncompliance possible, such as fines, lawsuits, or other compliance issues. It’s crucial to file certain reports on time, including quarterly financial statements, annual billing reports, health & safety alerts, and other documents. The compliance department has to ensure all the data is correct, relevant, and filed properly. 

To do that, compliance officers use a corporate compliance plan to make the process more efficient. Corrective action in the form of a corporate compliance plan ensures all risk areas are being monitored, all compliance concerns are dealt with, and that there’s appropriate disciplinary action against compliance violations. 

In such cases, even an alleged violation against applicable federal laws can be disastrous. Therefore, it’s crucial to be ready for any potential violations, auditing, and internal investigations. 

The importance of a corporate compliance plan is much more than most companies consider. If you’re unable to maintain compliance standards (especially in things, such as health care programs like Medicare and Medicaid) and your case lands in the OIG (Office of Inspector General), your organization will be in serious trouble. 

Steps to Implement an Effective Corporate Compliance Plan 

To avoid unnecessary issues, you should reevaluate current corporate compliance plans too, and implement corrective action plans to manage them effectively. Consider how well the current plan is designed, whether it’s being applied appropriately and whether it actually works. 

In any case, when deciding on implementing an effective corporate compliance plan, you can follow these steps. 

  1. Conduct a Well-Rounded Risk Assessment 

Risk assessment is at the core of every company’s compliance matters because a corporate compliance plan essentially saves the organization from risk. Therefore, it’s crucial to start with figuring out what risks the company faces. The best way to do that is to conduct a full risk assessment. 

Typically, when you’re assessing risk, you should keep the location of the facilities in mind, the industry, regulatory landscape, potential clients, business partners, foreign transactions, foreign official payments, and the competitiveness of the market. You may also have to consider any gifts you’ve received, use of third parties, travel logs, entertainment expenses, and any charitable, political donations. 

While most of those factors don’t apply to many businesses, it’s best to understand and know all of them. The point is to understand the standards of conduct and explain them to all relevant stakeholders, including current employees, new employees, board members, legal counsel, senior management, and more. 

There are some well-known frameworks like the ISO 31000 and COSO that most corporate compliance officers use. However, most organizations tailor the risk assessment process to cater to particular needs. 

In any case, the risk assessment will let you: 

  • Identify, monitor, analyze, and take care of any organizational risks. 
  • Provide the necessary information needed to allocate resources depending on the severity of each risk. 
  • Allow you to be flexible for reiteration and regular reevaluation of the current and potential risks. 

It’s crucial for the compliance officer to communicate the risk assessment with the board of directors and senior management before moving on. 

  1. Develop Corporate Policies and Procedures 

After your risk assessment, you have to move on to developing and establishing compliance policies and procedures. At this stage, you have to follow a code of conduct, but you can also include company-specific legal requirements. 

You may have to draft a compliance committee initially to ensure policymakers understand what they’re doing. It also helps avoid any conflicts of interest, confidential information leaks and improves internal controls. 

Corporate policies help develop standard procedures for any potential ethical or compliance issues. At times, the policies may have to be adjusted according to the latest risk assessments. Therefore, it’s also important to offer compliance training to maximize the understanding of each employee. 

  1. Communicate and Train with Employees 

While things like retention are crucial for each company, it’s more important when you consider compliance activities. Most organizations have a condition of employment that disallows employees to directly report any compliance issues. However, to avoid that, new regulations were put in place where whistleblowers were given more power as each company was mandated to have a hotline for any complaints. 

In such cases, it’s crucial to maintain a non-retaliation stance to minimize kickback. That’s why it’s crucial to constantly communicate with all employees and provide them with the necessary training. Employees that are not fully trained can’t be held accountable for any issues or lousy compliance efforts. 

 Usually, your training program should include: 

  • A Risk-Based Approach – Each employee with high-risk business units should receive extra training and attention. Offer them reimbursements, referral opportunities, and more to ensure maximum communication. 
  • Tailoring to a Specific Audience – Training should be given in the employees’ native language and format. 
  • A History of Past Episodes – The training should include previous issues with employees and the consequences of those issues. 

It’s crucial to maintain a two-way feedback channel too to help make the process more efficient. 

  1. Reporting and Investigations 

After you’ve identified the risks, developed corporate policies, and trained the employees, you should follow-up with reporting and investigations. This step allows you to find out if any employee ignored the rules, if the organization missed something, or whether there are any additional issues. 

Each organization has a designee who witnesses any potential compliance violations and reports them to senior management. After a report is made, you need to use a systematic approach to verify the report. Even company the ‘family members’ should be investigated to ensure maximum transparency. 

Employees should feel comfortable reporting any questionable activities without fearing any retaliation. Therefore, a strong whistleblower process should be implemented where anonymity is the primary concern. 

  1. Including Third Parties 

Third parties pose the most risk to organizations as there are no conflicts of interest. In most cases where a third party is involved, there has been some sort of discrepancy. Both the payers and employees face the issues brought on by including third parties. 

Therefore, it’s imperative to have a due diligence process to vet third parties. That can include partners, consultants, vendors, customers, and more. 

Your due diligence process should: 

  • Take a Risk-Appropriate Approach – Spend as much time as possible, investigating all the third-parties you’re working with to minimize risk. 
  • Connect to a Broader Risk Framework – It’s crucial that the risk framework and due diligence process have the same goals. It’s important to communicate your company’s risk tolerance because it’s crucial to be transparent with all third parties. 
  • Balance Internal Structure and Resources – It’s critical to use technology to identify and manage any red flags in the process. Automation can be used to significantly reduce redundant tasks in such cases. 

It’s especially important to avoid third parties during internal audits and checks. 

Implementing a Great Corporate Compliance Plan 

Corporate compliance isn’t just important in major hubs like New York and San Francisco anymore. Every company in every industry needs to follow strict rules and regulations to maintain their business. 

It’s important to follow the steps mentioned above to effectively implement your corporate compliance plan. However, keep in mind that each organization and industry is slightly different and may need additional tweaking. 

A great corporate compliance plan is one where you follow the right steps while including company-specific factors, ensuring complete compliance.

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