When does a compliance review make sense?

This blog welcomes Linda DiSantis, of EthicsLINC, who will contribute posts from time to time on compliance-related topics. Below is Linda’s first post.

As an attorney for a thriving company, when should you consider whether your company needs a review of its compliance efforts? Sometimes, it’s easy — your company operates in a regulated industry or has encountered compliance and/or ethics issues that have landed it in trouble with the government, shareholders, employees or other stakeholders. But how about everybody else?

Consider six business changes that might trigger the need for a review of compliance efforts: (1) Companies moving into international markets for the first time. Do your employees and contractors know the rules regarding doing business with government officials under the U.S. Foreign Corrupt Practices Act and similar laws in other countries? What about customs, privacy, banking and human resources issues with operations overseas? (2) Companies rapidly increasing the number of employees. Do you have good employment practices in place as you add more supervisory personnel and lessen your ability to manage your employees directly? (3) Companies moving into a new line of business. Are there regulations that you have previously not had to deal with? Are there issues with regulated materials that your company has not handled before, like pharmaceuticals, dangerous goods, or food products? (4) Companies going public. Have you established guidelines to address insider trading? (5) Companies considering acquiring or merging with another company. What are the specific compliance issues raised by that acquisition or merger? (6) Companies developing new markets or creating new business development strategies. Are there antitrust issues? Or issues with government contracting?

These examples are just a few areas of legal compliance process development that may need to be explored as your company grows and changes. Although it is easy to say, “I can’t afford to spend money on a compliance program right now,” you need to consider whether you can afford not to.

We welcome comments

Your email address will not be published. Required fields are marked *