INTEGRATING A COMPLIANCE AND ETHICS PROGRAM WITH A CONTROL FRAMEWORK LEVERAGING COSO’S INTERNAL CONTROL–INTEGRATED FRAMEWORK

Abstract

A sound corporate compliance and ethics program (Program) is critical to prevent and detect criminal conduct; however, weaving it into a organization’s culture can be challenging. A great starting point is to thoroughly understand minimum requirements as defined in Chapter 8, Part B of the U.S. Sentencing Guidelines (Guidelines) entitled Remedying Harm from Criminal Conduct, and Effective Compliance and Ethics Program published by the HYPERLINK "https://www.ussc.gov/" U.S. Sentencing Commission. These Guidelines provide incentives to organizations that follow a structural foundation to self-police their own conduct through an effective Program. Since 1991, the Guidelines have served as corporate America’s blueprint in structuring effective programs to prevent and detect violations of law. Under the Guidelines, an organization that is convicted of a crime may be eligible for a reduced sentence if it had an ‘effective’ Program in place at the time the crime was committed. The Guidelines define the minimum requirements for an effective Program, which includes exercising due diligence to prevent and detect criminal conduct, as well as promoting an organizational culture that encourages ethical conduct.Once this foundation is clearly understood, it is wise to integrate the Guidelines into a control framework, such as the Internal Control – Integrated Framework of the Committee of Sponsoring Organizations of the Treadway Commission (HYPERLINK "https://www.coso.org/Pages/default.aspx" COSO). Applying the COSO framework will greatly enhance an organization’s ability to demonstrate a commitment to legal compliance. This article offers an approach in addressing the Guideline’s minimum requirements in harmony with COSO’s Internal Control – Integrated Framework (COSO Framework).