The DOJ Fraud Section’s “Evaluation of Corporate Compliance Programs” puts chief compliance officers, the “C Suite” and the Board of Directors on notice about how the adequacy of their companies’ compliance programs will be evaluated by prosecutors if investigated.
The publication outlines specific factors that prosecutors should consider in conducting an investigation of a corporate entity, determining whether to bring charges, and negotiating plea or other agreements. These factors, commonly known as the “Filip Factors,” include “the existence and effectiveness of the corporation’s pre-existing compliance program” and the corporation’s remedial efforts “to implement an effective corporate compliance program or to improve an existing one.”
This document provides some important topics and sample questions that the Fraud Section has frequently found relevant in evaluating a corporate compliance program, and they include:
1. Analysis and Remediation of Underlying Misconduct
2. Senior and Middle Management1
3. Autonomy and Resources
4. Policies and Procedures
5. Risk Assessment
6. Training and Communications
7. Confidential Reporting and Investigation
8. Incentives and Disciplinary Measures
9. Continuous Improvement, Periodic Testing and Review
10. Third Party Management
11. Mergers and Acquisitions (M&A)
Compliance Program Guidance is required reading for companies, and a valuable resource for officers and directors who want to ensure that their compliance programs satisfy regulator expectations. The DOJ expects compliance programs to be both strong on paper and in practice.