Welcome to Episode 8 of Compliance Man Goes Global podcast of FCPA Compliance Report International Edition. In this episode, we will focus on tough questions, which Compliance officers need to address. We will explore this matter in a plain language so to say and in the simple game form. Moreover, to make the podcast handy and more appealing we attach respective illustration from the Compliance Man illustrated series, created by Timur Khasanov-Batirov.
For those of our listeners who are not aware about our format, in each podcast, we take two typical concepts or more accurately misconceptions from in-house compliance reality. We check out if these concepts work at emerging jurisdictions. For each podcast, we divide roles with Timur, a practitioner who focuses on embedding compliance programs at high-risk markets. One of us will advocate the concept identifying pros. The second compliance man will provide arguments finding cons and trying to convince audience that that we face a pure myth. As a result, we hopefully will be able to come up with some practical solutions for in-house compliance practitioners.
Tom: OK, Tim, let’s get started.
Myth #1 Decrease of the Compliance department’s budget could significantly affect its effectiveness. Tim, would you agree with this statement?
Tim Khasanov-Batirov: I believe it is a tricky question. It depends. Obviously, Compliance officer should has resources to do his job. The question is what we consider as an “adequate” level of resources or budget. Consequently, we need to deploy criteria, which could be used for estimates. In my view, the best algorithm will be the following:
· To define scope of applicable regulatory requirements;
· To conduct risk assessment;
· To plan activities, which will tackle high-risk regulatory requirements. This for instance might be related to implementation of the 10 Hallmarks of the Effective FCPA Compliance Program;
· To estimate respective budget.
Thus, in my opinion mere fact that the department’s budget is decreased or increased does say anything. First, you have to look whether you have funds to address key priorities.
Another thing to mention is allocation of resources. For instance, in my view due to creation of different apps and software compliance staff is in position to create training video itself significantly cutting costs on expensive video production. Probably you will not become Oscar winner for your video but it is not your goal. One more tip for compliance practitioner is to approach HR, PR/Communications teams to check out if they might be interested to conduct joint activities with Compliance department. In the ideal scenario, they might finance your projects as for instance contest for personnel on knowledge of corporate Ethics Code. In this case, both HR and Compliance departments will find themselves in a win-win situation.
Tom, you write often about Compliance department’s effectiveness. What will be your recommendations when we refer to budget cutting?
Tom: A couple of things come to my mind, Tim:
When I refer to operationalizing Compliance, I mean tailoring your efforts to particular organization. Thus, look at level of maturity of your organization in order to find out what resources your need and what is more important whether those resources will help you in practice. For instance, you might get budget for sophisticated databases, which might be useless if there is no trained personnel to operate this software. You also do not want to ask budget for doing fancy training video as you already mentioned knowing that majority of staff is located in the fields and would not be able to watch it. I also encourage Compliance practitioners (who are primarily lawyers) to dig deeper in corporate budgeting process exploring basic financial concepts and the logic of forecasting. This will allow you to speak with decision makers on the same business language.
But from the corporate perspective if your business takes a downturn you may well be faced with a smaller budget and overall compliance resources. If that occurs you will have to do less with less by prioritizing on your highest risk and manage those risks. The key is how you use the resources available to you.
Tim: Tom, I agree with you.
Tom: OK, Tim. We can formulate the next concept or maybe misconception in the following way:
Myth #2. We have adopted internal policies. Now we can save on hiring high qualified and consequently high paid compliance personnel. Tim, will you agree with this concept?
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