Board Oversight of Compliance

The Need for Independent Evaluations of Program Effectiveness

Effective compliance programs require top-down commitment beginning at the Board. The OIG believes a key factor in determining the effectiveness of compliance programs is how well the Board meets its fiduciary duties and responsibilities of overseeing compliance. To do the job properly, Boards need to be educated on the compliance program, including asking probing questions about program goals and objectives. For this, they must have a realistic understanding of the resources necessary to implement and sustain the program and should have a committee focused on this initiative. The Board should further consider how management measures compliance program effectiveness, with the compliance officer reporting to the Board on a regular basis. Compliance officers should prepare answers for the types of information Boards should be seeking and then encourage them to ask those questions. The following two experts provided suggestions on how to assist Boards in meeting their obligations.

Suzanne Castaldo, JD, provides clients with experts to conduct independent evaluations of compliance program effectiveness and prepare reports outlining findings and recommendations. These evaluations are critical to proper Board oversight, as they provide considerable credible information and data as to how the program is functioning. The OIG has made it clear that compliance officers have the responsibility for ongoing monitoring of their own programs; however, they cannot independently provide ongoing auditing of the program’s effectiveness.  There is no better way to evidence program advancements than to have recognized and credible experts provide results with an in-depth document and system review that includes onsite interviews of key managers and staff. Such reviews should provide reports of around 50 pages detailing evidenced accomplishments and opportunities for improvement. In addition, there should be specific actionable recommendations and suggestions that compliance officers can include in their annual work plans, with results being reported to the Board.

Carrie Kusserow is a Compliance Expert with over 15 years of experience working with Boards as a compliance officer and consultant. She notes that HHS Inspector General Dan Levinson stated that Boards should be active, questioning, and exercise constructive skepticism in their oversight. Furthermore, if an organization becomes subject to enforcement actions and must enter into a CIA with the OIG, a major factor in terms and conditions will be determined by whether the Board has been providing proper oversight. If so, the OIG may decide that a CIA is unnecessary or mitigate terms and conditions. However, if the OIG finds the program is inadequate; there will be a CIA and it will include stringent requirements on the Board, including engaging a Compliance Expert to assist the Board in meeting its obligations. The problem for many Boards is to know what questions they should be asking. It is advisable for the compliance officer to assist the Board here, beginning with reviewing the structure, management, and operation of the program; to ensuring there has been proper designation and delegation of authority to the compliance officer, including open access to all documents and other information relevant to compliance activities.

Questions Boards Should Ask

• Does the compliance officer have sufficient authority to implement the compliance program?
• What level of resources is necessary to properly implement and operate the program?
• Has the compliance officer been provided with the authority and resources needed?
• Have compliance-related responsibilities been delegated across all levels of management?
• Does the compliance program undergo periodic independent effectiveness evaluations?
• Is everyone held equally accountable for meeting compliance-related objectives during performance reviews?
• How has the Code of Conduct been incorporated into corporate policies across the organization?
• How does the Board know that the Code is understood and accepted across the organization?
• Has management publicized importance of the Code to all employees?
• Have policies and procedures for the operation of the compliance program been implemented?
• Have program managers implemented compliance policies and procedures for their operations?
• What is the scope of compliance-related education and training?
• Has the effectiveness of such training been assessed?
• What measures are there to ensure all covered persons receive compliance training?
• Does the compliance program address significant risks and how are they identified?
• What is covered in the compliance officer’s annual audit plan?
• How does the Board know that identified problems and issues are addressed in a timely manner?
• Is the Board aware of regulatory and industry developments affecting the organization?
• How are “at-risk” operations assessed from a compliance perspective?
• What evidence is there of ongoing monitoring of high risk areas by program managers?
• What is the process for evaluating and responding to suspected compliance violations?
• What policies address protection of “whistleblowers” and those accused of misconduct?
• Are individuals and entities screened against the OIG LEIE before engagement, and periodically thereafter?

Connect With a Compliance Expert

Strategic Management has decades of experience conducting detailed evaluations of compliance program effectiveness. If you would like assistance with your current compliance program or need to set up a program review, contact us online or give us a call at (703) 683-9600 to speak to a compliance expert today.