Search within CPAB

PLI One-Hour Briefing on Compliance & Ethics Program Assessment

On September 28 at 1:00 Eastern Rebecca and Jeff will be leading a One-Hour Briefing for the Practising Law Institute on C&E program assessment. The program will cover:

Official requirements for conducting C&E program assessments and business-related reasons to do so
The various tools used in conducting assessments: interviews, document review, surveys, focus groups, benchmarking, maturity models, etc.
When and how to conduct an assessment under the attorney-client privilege and related matters of confidentiality
The size, scope and frequency of assessments
What to know and to look out for in formulating findings and recommendations, and in drafting and disseminating an assessment report
The role of the board of directors and of senior management
For each of the major elements and sub-elements of a C&E program – risk assessment, program management and oversight, policies, training, auditing, helplines, incentives, etc. – what to look for both in terms of efficacy and opportunities for improvement
Assessing the characteristics of an effective C&E program, such as independence, clout, reach and sufficiency of resources
“Deep dives” into areas of high risk – such as anti-corruption and antitrust compliance
The hallmarks of an ethical organizational culture
Use of “behavioral ethics” ideas and information in C&E program assessments

More information about the program can be found here

Assessing compliance incentives

There are two types of incentives that typically should be reviewed in a C&E program assessment.
The first concerns the extent to which a company’s general incentive structure has the effect (presumably unintentional) of promoting non-compliance. The second concerns incentive measures directly aimed at promoting compliance.
The two overlap to some degree but are conceptually and operationally distinct, and they warrant separate discussions in an assessment report. Indeed, the consideration of general incentives is often part of the risk-assessment component of a report (at least for engagements that have such a component), rather than appearing in the incentives section.
Regardless of where the discussion of incentives is located in a report, properly framing the nature of the inquiry concerning general incentives is key. The question here is not – we believe – whether an incentive structure creates a risk of wrongdoing. That would be said of virtually any results-based compensation structure. Rather, the inquiry should be whether an incentive structure creates an undue risk of wrongdoing.
Note that this is largely a subjective determination, and there is no universally accepted definition of “undue” to be applied in this context. Indeed, assessing whether compensation creates undue risks in any given setting turns on a variety of factors beyond the specifics of the compensation itself – particularly culture-related ones. But, in our experience, the undue risk formulation works well enough in assessment interviews, with the discussion typically turning on whether a) the performance targets upon which compensation decisions are partly based are realistic or can be met by some employees only through illegitimate means and b) the consequences of failing to meet the targets are overly harsh.
It is also important to consider the extent to which senior leaders, HR and others consider the risks created by compensation when setting goals. Is there an effort to understand the level of pressure created by various employee objectives and goals, and the extent to which performance goals create compliance risks?
Also relevant to assessing this sort of risk are incentives vis a vis third parties. While this aspect of risk assessment is becoming routine with respect to FCPA risks (e.g., ensuring that a distributor’s margins are reasonable), companies should also consider incentives and risks for other areas of legal exposure involving third parties (such as antitrust and fraud).
The second type of incentive to be assessed is – as noted above – incentive measures directly aimed at promoting compliance. These, in turn, consist of both tangible and intangible incentives.
The most commonly used tangible C&E incentive is inclusion of C&E criteria on performance evaluations. Some of the indicia of efficacy here are:
– Having examples in evaluation materials of different levels of C&E-related behavior generally (e.g., outstanding, strong, needs improvement).
– Having these examples tailored for different levels in the corporate hierarchy (e.g., what is outstanding for a leader, manager, other).
– Reinforcing the importance of the C&E component of personnel evaluations through appropriate discussion of this topic in the code of conduct, training and other communications.
Note that the other side of the tangible incentives coin is penalizing behavior that is undesirable but doesn’t rise to the level of being an appropriate subject of discipline. An example is denying bonuses or other forms of compensation to those who fail to take mandatory C&E training. In assessing this sort of incentive, one might make sure that the company actually does what it says it will do (e.g., withhold bonuses) in these instances.
Intangible incentives are, for the most part, recognition programs. What makes them successful is:
– In cases of awards, using the process of selecting nominees to educate employees about the C&E program. Companies should create a real campaign around the effort, including having as much senior management involvement as is reasonably possible.
– For more everyday forms of recognition, train managers to identify and (where appropriate) laud others in the work group employees for ethically exemplary behavior.
Finally, one should be alert to unintended consequences for compliance-directed incentive measures. For instance, providing bonuses for having no workplace accidents could have the unintended consequence of suppressing reporting of accidents.

Assessing the E&C Investigations Process

Investigations are one of the more difficult and riskier activities of an E&C program. Poorly-conducted investigations can create serious legal risks for an organization. In addition, the mishandling of investigations can damage the way in which employees perceive E&C programs, in particular where the report was initially made to the E&C department, through a hotline or otherwise. The mishandling of E&C investigations can corrode the sense of organizational justice and the culture of ethics and compliance at an organization. In short, E&C-related investigations are a serious business, and assessing them is therefore an important component of assessing an E&C program.
Assessing an investigations process is often complicated by the fact that investigations at many organizations are conducted by a number of functions, and privilege concerns can further complicate any review. In addition, there are a large number of facets of the investigations process that must be reviewed in order comprehensively to assess that process, which further increases the level of complexity. When reviewing investigations procedures, some of the more helpful areas of inquiry include the following:
• Guidelines: Are there written guidelines governing how investigations will be assigned? Are they logical and appropriate? Are they followed in practice?
• Is there a written investigations protocol, and does it include those elements that are necessary to facilitate robust investigations? Some of the elements that are typically included in investigations manuals include:
o Professionalism standards that govern the investigations process, such as a discussion of the importance of impartiality, competency, confidentiality, and non-retaliation.
o Step-by-step guides for each aspect of investigations, including intake procedures, preliminary analysis of the allegation, assigning investigations, opening a case file, creating an investigative plan, reviewing documents, whom to interview and how to do so, preparing interview notes, assessing and determining findings, preparing a final report, responding to the complainant and subject, and closing out the case.
o Samples and outlines of investigation documents, such as reports of interviews, reports of investigation, and sample communications with interviewees, complainants, supervisors, and subjects of investigations.
• Are there protocols that govern how evidence can be collected (e.g., required approvals before electronic data is accessed) and when and how litigation or investigation holds will be issued?
• Are there clear guidelines governing when to get the Legal Department involved and the steps to be taken when conducting an inquiry under the attorney-client privilege?
• Is there adequate oversight of the process? And does E&C have the ability to oversee investigations conducted by other functions, where appropriate?
• What are the protocols and practices for documenting investigations? What type of case management system is used? Is the case management system adequate to permit the E&C team appropriately to document investigations?
• Is the case management system adequate to permit aggregation and assessment of metrics related to reports received and investigations conducted? Are metrics in fact collected and considered? Are metrics reported to executive leadership and the audit committee? Are they reported out to employees?
• Are investigators appropriately qualified and adequately trained? Is ongoing training provided?
• Are investigators asked to consider supervisory fault when investigating allegations of E&C violations?
• Are investigators asked to consider appropriate remedial measures? Are there opportunities to escalate critical remedial measures on a timely basis? (For example, if an investigation reveals a serious gap in a control, can the investigator seek remediation for that quickly?)
• Where an organization has locations outside the United States, do investigations procedures consider local legal requirements and prohibitions governing internal investigations?
• Does the organization track the amount of time required to complete investigations? Are there undue delays in the time period required to complete investigations?
• Is the audit committee able to oversee the most serious investigations when it is appropriate for them to do so? Is there a written escalation protocol that governs when the audit committee should be informed about the most serious allegations/investigations?
The questions above should be asked not only regarding written protocols and processes (e.g., is there a written protocol governing how investigations are assigned?) but also regarding how an organization’s investigations process is implemented in practice (e.g., are investigations in fact assigned in a timely and reasonable manner?). This can require discussions of sensitive information, and the assessor must be cautious regarding privilege issues.
Ultimately, an effective assessment of an investigations process seeks determine whether the process possesses three critical attributes:
1) Independence: Are investigations conducted independently, objectively and impartially?
2) Access and authority: Are investigators permitted access to those people and documents that are necessary in order to conduct the investigation? To travel to those sites necessary? In other words, are there any obstacles or impediments to conducting a thorough investigation?
3) Expertise and professionalism: Is the investigator qualified to conduct the type of investigation? Does he or she have the relevant level and areas of expertise?
While perhaps obvious, we note that the above is merely a sampling of both areas to cover when assessing E&C investigations and questions that can be asked in each of those areas. E&C investigations can be complicated, risky and critically important to an organization’s E&C program, and the assessment process is therefore both challenging and significant.

Assessing compliance training

Training is not just another part of every C&E program; it is generally the part that touches the work lives of more of a company’s employees than do other elements. It should therefore be a significant focus of any program assessment.
The possible avenues of inquiry here are broad, as one would imagine, and each assessment will have its own areas of particular focus. But a partial list of core training assessment questions might include the following.
Plan. Is there a written plan for providing training on an annual or other periodic basis?
Risk-based. Are the training curriculum and content based – whether formally or not – on an assessment of risk? Is the risk assessment designed to be helpful in this regard?
Role of the Board. What training does the Board receive regarding its oversight of the program? What training does the Board receive regarding its own compliance risks?
Role of senior management. Are senior managers trained on the C&E risks and responsibilities applicable to their role at the company? Does this include their duty to support an ethical culture?
Supervisors. Is there C&E training for supervisors regarding their obligations to support the program and how to do so?
Other roles. Is other training appropriately role based? (E.g., is anti-corruption training adapted to different roles – such as internal audit, finance, sales and marketing, government relations and logistics?)
Participation. Is training that is supposed to be mandatory in fact treated that way? What is done to encourage stragglers to take required training? For in-person training, is a sufficient record kept of attendance?
Media. Does the company have a good blend of in-person and computer-based training?
Content. Is the information in the training accurate, comprehensive and clear?
Quality. Is the training engaging? Is it memorable? Too long or too short? (Note that one way to make training memorable is to use – as appropriate – “case studies” based on actual events at the company.)
Repetition. Is the same training program shown to employees more than once? (While some degree of repetition is acceptable and maybe even be desirable, too much of the same thing can send the wrong message to employees.)
Short programs. Does the company use short training programs to refresh employee awareness of key C&E topics?
Translations. Have they been done for all of the company’s principal languages? Is the training “US centric”?
Feedback. Does the company seek comments and suggestions from employees on the training?
Integration plan. Does the company have a plan for rolling out training to newly acquired entities? Is there a sufficient C&E component to the new hire onboarding process?
Third party training. Does it reach the right (i.e., high risk) third parties?
We should emphasize that – like all posts on this blog – the above does not aim to be comprehensive. However, we do hope it is helpful.

Audit Interviews Regarding Employee C&E Knowledge

An often useful but not always used self-assessment tool is to include in an audit interview questions to determine if employees have sufficient knowledge of C&E program requirements and resources. Knowledge questions – as these might be called – are intended to be asked in addition to, and not in lieu of, questions about actual violations of law and policy.
C&E knowledge questions might include some of the following – tailored, as appropriate, to the interviewee’s job duties:
• Are you aware of company policy regarding
o Offering and receiving gifts and entertainment?
o Providing travel and other things of value to customers and government officials?
o Engaging third parties to represent the company in dealing with governmental entities?
o Making facilitating payments?
o Having contact with competitors?
o Addressing conflicts of interest?
o Taking annual C&E training?
o Reporting possible misconduct?
Yes answers to any of these of these should trigger follow-up questions designed to test the knowledge the interviewee says she has. Some examples:
• What would you do if a customer asked you to refer his or her family member for a job at the company?
• What are the approval requirements before providing a meal to a government employee?
• What topics are forbidden to discuss with competitors?
• What should be done if you have a possible conflict of interest?
• What are the channels for reporting suspected wrongdoing?
• How would you seek advice on an ethical matter?
• Where can you find copies of company C&E policies?
As noted, questions should be tailored to the interviewee’s duties. For instance, managers (but not necessarily other employees) should generally be asked if they would know what to do – and what not do – if an employee reported suspected wrongdoing to them. Or, selected interviewees might be asked if they would know what to do and not do in the event of a “Dawn Raid.”
The benefit of using C&E knowledge questions in audits is not only in the value of what is learned from the answers. The mere asking of such questions can send a message that may travel widely in a company about the importance of C&E generally to management. Of course, deploying such questions also incurs a cost in terms of the time and resources of audit staff and other employees, and the use of such questions can decrease the time available for taking other important audit measures. However, such questions can be a valuable tool in the audit/assessment tool box, and companies should thus consider the costs and benefits of such a practice.

Assessing risk assessment

When the Federal Sentencing Guidelines for Organizations were first issued in 1991, risk assessment was not among the specified elements of an effective C&E program. By the time risk assessment was added to the definition of an effective C&E program in 2004 (as part of a comprehensive revision of this aspect of the Guidelines), many of those working in the C&E field saw risk assessment as indispensable to program efficacy, a view which has indeed strengthened over the years since then.
Risk assessment can come up in two ways in the program assessment setting.
First, the assessor can be asked to conduct a risk assessment alongside the program assessment. In this model a portion of all or most of the assessment interviews is devoted to posing risk assessment questions about the client organization.
One advantage of such an approach is that it can make the rest of the assessment (i.e., the pure program assessment part) more risk sensitive. Another advantage is economic – combining risk and program assessment might entail a more efficient use of interviewee times and assessor resources than would having two totally separate processes. On the other hand, a combined approach may mean insufficient time for each.
The other way in which risk assessment comes up in a program assessment setting – and this is presumably the case in all program assessments – is that how a company conducts risk assessment should itself be assessed. There is, of course, no one-size-fits-all set of criteria for this analysis, but there are certain questions that are particularly helpful and approaches that seem to work well generally – including the following:
– Is the risk assessment designed to identify information regarding all significant elements of the C&E program? Many risk assessments are designed to produce two types of risk-related information: that which helps the board of directors and senior management oversee the program and that which helps the internal audit function audit the program. These are important, of course. However, as a matter of common sense (and for meeting the pertinent Sentencing Guidelines expectations), the design and operation of all other aspects of the program – e.g., policies, procedures, training, communications, monitoring, the helpline, incentives, accountabilities – should be informed by the results of the risk assessment too.
– Does the assessment produce qualitative – as well as quantitative – information? Most risk assessments produce some quantitative data, particularly with respect to the likelihood and impact of a potential violation. But in assessing a risk assessment, one should also consider whether and how well it produces qualitative data.
One type of qualitative data concerns the “why” of risk. For instance, a risk caused by ignorance or lack of appreciation of applicable C&E standards tends to suggest enhancing relevant training and communications, whereas a risk caused by lack of attention by key personnel may suggest the need for stronger accountability measures.
A second type of qualitative data that risk assessments should generate is based on the “where” and “how” of risk. For instance, it is less helpful to merely identify competition law as a risk than it is to identify particularly risky markets (by geography and/or product/service line) and types of violations (e.g., division of markets) more likely to occur than others.
Finally, in assessing a company’s C&E risk assessment process, one should consider what might be called the risk assessment of every day work. That is, while presumably all companies should have a formal risk assessment process, the particulars of that process may depend in part on how well the company already knows its risks from other aspects of the program, such as monitoring, and indeed from having law or compliance personnel being deeply involved in business planning and operations – and whether the knowledge obtained this way is put to use to help mitigate C&E risk in an effective manner.

Terms, Conditions and Privacy Policy

  1. The information and ideas on this blog are provided as a public service to the web community by Kaplan & Walker LLP (“the Firm”) and do not constitute solicitation or provision of legal advice. Since legal advice must be tailored to the specific circumstances of each case, and laws are frequently changing, nothing on this blog should be used as a substitute for the advice of competent legal counsel.
  2. If you send an email or other communication to this blog please do not include any confidential or otherwise sensitive information. Unsolicited communications do not create an attorney-client relationship and confidential information included in such communications cannot, as a matter of law, be protected from disclosure. The Firm and its attorneys have no duty to keep confidential any information you provide them, other than as mandated by applicable privacy laws.
  3. The opinions expressed in this blog do not necessarily reflect those of the Firm or its attorneys.
  4. While the Firm will try to provide useful information on this blog, it makes no representation about the accuracy or completeness of the information in or linked to from this blog.
  5. This blog may be considered attorney advertising under the law of various jurisdictions.
  6. The Firm’s attorneys have for many years has been in the business of providing compliance and ethics (“C&E”) related legal services, and that experience will likely inform much of the content of this blog. In developing topics and selecting guest authors for the blog they will also likely draw upon the various relationships they have formed over the years with organizations and individuals in connection with their C&E work. They will follow pertinent FTC guidelines for bloggers and otherwise seek not to let commercial considerations dictate the content of the blog.
  7. The Compliance Program Assessment Blog is copyrighted by Kaplan & Walker LLP © 2016.
  8. Privacy Policy
    This privacy policy discloses the privacy practices for the Compliance Program Assessment Blog.
    1. Information Collection, Use, and Sharing
      We (Kaplan & Walker LLP or “the Firm”) are the sole owners of the information collected on this site. We only have access to/collect information that you voluntarily give us via email or other direct contact from you. We will not sell or rent this information to anyone.
      We will use your information to respond to you regarding the reason you contacted us. We will not share your information with any third party outside of our organization [although the web administrator – who is a consultant to the Firm – will have access to the information, and she has agreed to abide by the terms of this policy].
    2. Your Access to and Control Over Information
      You may opt out of any future contacts from us at any time. You can do the following at any time by contacting us via the email address given on our website:

      • See what data we have about you, if any.
      • Change/correct any data we have about you.
      • Have us delete any data we have about you.
      • Express any concern you have about our use of your data.
    3. Security
      We take appropriate precautions to protect your information.
    4. Updates
      Our Privacy Policy may change from time to time and all updates will be posted on this page.
      If you feel that we are not abiding by this privacy policy, you should contact us immediately at

Welcome to the Compliance Program Assessment Blog

Rebecca Walker and Jeff Kaplan of Kaplan & Walker LLP are pleased to announce the launch of the Compliance Program Assessment Blog (

“We have each been conducting compliance and ethics [“C&E”] program assessments since the 1990s and are very happy to have this opportunity to share publicly assessment-related best practices and other practical ideas and information,” Kaplan said. “Although program assessments have long been recognized by both enforcement officials and C&E professionals as essential to promoting and maintaining program efficacy, many companies are just now taking their first steps in this area. We hope that the Blog will be of assistance to them in this rewarding but challenging facet of ensuring good corporate citizenship,” Walker added.

The Blog will address, among other topics:

  1. Assessment mandates and benefits. We will survey and analyze the growing body of legal standards and other official expectations for conducting C&E program assessments, as well as business-related reasons to do so.
  2. Assessment methods. The Blog will review the various tools used in conducting assessments – interviews, documents reviews, surveys, focus groups, benchmarking, etc. – and provide guidance on the when, where, who and how of each. We will also address:
    • The issue of when and how to conduct an assessment under the attorney-client privilege and related matters of confidentiality.
    • Questions concerning the size and scope of assessments.
    • What to know and to look out for in formulating findings and recommendations, and in drafting and disseminating an assessment report.
    • How frequently companies should assess their programs.
    • The interplay between program and risk assessments.
    • The role of the board of directors and of senior management in assessments.
    • The use of maturity models and other frameworks in assessments.
  3. Program elements. For each of the major elements and sub-elements of a C&E program – program management and oversight, policies, procedures, training, auditing, helplines, incentives, etc. – we will consider what to look for both in terms of efficacy and opportunities for improvement.
  4. Program attributes. We will explore criteria for use in assessing key characteristics of an effective C&E program that “cut across” individual program elements, such as independence and sufficiency of resources.
  5. Culture. The Blog will discuss the various hallmarks of an ethical organizational culture, and how they can be effectively measured – perhaps the most challenging of all aspects of conducting a program assessment.
  6. Social science research findings and survey data. Increasingly, assessments are expected to have scientific or quantitative dimensions, and the Blog will discuss approaches to meeting those expectations, such as through the use of publicly available survey data and by adapting “behavioral ethics” ideas and information to the compliance program setting.

Our plan is to spend the next few months building the site out with foundational posts. After that, we will encourage other practitioners to submit guest posts (although we will not accept advertising). We may also conduct interviews for the Blog.

We hope that you find the Compliance Program Assessment Blog useful and – in the spirit of its subject matter – that you will let us know how we can continuously improve.

  • Assessment mandates and benefits
  • Methodologies
  • Risk assessment
  • Program structure
  • Standards and procedures
  • Training and communications
  • Auditing, monitoring, and other “checking”
  • Reporting procedures, including helplines
  • Investigations
  • Discipline and other remedial measures
  • Personnel measures
  • Culture
  • Guest Posts
  • Uncategorized