The Importance of Board Oversight: The Role That Directors Play In an Organization's Ethics and Compliance Program
"The challenge for boards and compliance officers is to view the increased scrutiny and enhanced standards not merely as a host of new legal requirements, but also as an opportunity to review and enhance their corporate governance and compliance practices and set a true 'tone from the top.'"
The expansion of director responsibility has risen from several key events, including:
- The enactment of the U.S. Federal Sentencing Guidelines for Organizations ("the Organizational Guidelines")
- The decisions in In re Caremark International Inc. Derivative Litigation and Stone v. Ritter
- Two rounds of amendments to the Organizational Guidelines
- Widespread acceptance and application of Department of Justice ("DOJ") guidance for the prosecution of organizations
- And expanded application of the responsible corporate officer doctrine
Despite these fundamental changes, organizations often fail to adequately support directors with the vital resources and expertise they need to exercise effective oversight of an ethics and compliance program. Even if an organization has robust ethics and compliance practices below the director level, failure to have directors who are knowledgeable about the content of the program, and that exercise reasonable oversight of the implementation and effectiveness of the program, will render the program "ineffective" in the eyes of regulators, prosecutors and federal judges. This whitepaper examines the history of events leading to board oversight of ethics and compliance programs and examines those actions that constitute appropriate oversight in light thereof. Read more, complete the form below.