No Result
View All Result
SUBSCRIBE | NO FEES, NO PAYWALLS
MANAGE MY SUBSCRIPTION
NEWSLETTER
Corporate Compliance Insights
  • Home
  • About
    • About CCI
    • CCI Magazine
    • Writing for CCI
    • Career Connection
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Explore Topics
    • See All Articles
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Well-Being at Work
    • Leadership and Career
    • Opinion
  • Vendor News
  • Library
    • Download Whitepapers & Reports
    • Download eBooks
    • New: Living Your Best Compliance Life by Mary Shirley
    • New: Ethics and Compliance for Humans by Adam Balfour
    • 2021: Raise Your Game, Not Your Voice by Lentini-Walker & Tschida
    • CCI Press & Compliance Bookshelf
  • Podcasts
    • Great Women in Compliance
    • Unless: The Podcast (Hemma Lomax)
  • Research
  • Webinars
  • Events
  • Subscribe
Jump to a Section
  • At the Office
    • Ethics
    • HR Compliance
    • Leadership & Career
    • Well-Being at Work
  • Compliance & Risk
    • Compliance
    • FCPA
    • Fraud
    • Risk
  • Finserv & Audit
    • Financial Services
    • Internal Audit
  • Governance
    • ESG
    • Getting Governance Right
  • Infosec
    • Cybersecurity
    • Data Privacy
  • Opinion
    • Adam Balfour
    • Jim DeLoach
    • Mary Shirley
    • Yan Tougas
No Result
View All Result
Corporate Compliance Insights
Home Compliance

Budget Cuts: The Dangerous Compliance Threat

by Michael Volkov
January 31, 2019
in Compliance
orange handled scissors cutting word budget in half

When companies are in financial straits, budget cuts are a reasonable expectation. But how deep should the cuts go when it comes to the E&C program? Businesses can’t profess their support for ethics and compliance and then strip resources away.

A fundamental requirement for an effective ethics and compliance program is that it is supported by “adequate resources.” This does not mean a bare minimum requirement, nor is the requirement satisfied by flat-lining a compliance department’s annual budget.

Someone is not getting the message straight; a compliance program has to evolve – that doesn’t mean it has to suck up more resources each year, but it does mean it cannot be strangled. A CCO faces a real dilemma: The CCO is responsible for implementing an effective ethics and compliance program. How can a CCO do so if his/her program budget is cut?

CCOs are experiencing budget cuts after years of consistent growth or consolidation. Such budget cuts pose significant risks unto themselves.

What is a CCO supposed to do when the funding does not adequately support the company’s ethics and compliance program?

I do not mean to suggest that CCOs should be immune from budget cuts or belt-tightening, depending on the company’s financial situation. Such a narrow view would be unrealistic and unfair.

However, a CCO has to be honest about his/her situation. A company has to be able to explain why it has to cut a compliance program budget. If a company increases financial resources and internal audit to ensure compliance with Sarbanes-Oxley or cuts compliance to fund business expansion, the company cannot turn around and fund those initiatives with a blind ax to the compliance function.

If corporate leadership is committed to ethics and compliance and the proposed cuts would significantly hinder the company’s compliance program, corporate leaders better have a well-documented justification and explanation for such a decision.

Companies cannot hide behind budget issues as a convenient way to strangle a compliance program while funding pet projects or initiatives. Such a dangerous strategy will be exposed once a CCO explains the basis for his/her budget request – if the budget amount is carefully calibrated to support a compliance program’s ability to mitigate relevant risks, corporate leaders cannot – and should not – cut the compliance program budget. To do so is nothing less than irresponsible.

Corporate leaders cannot mouth their support for the company’s compliance program while quietly removing or reducing resources needed to carry out an effective compliance program. In these unfortunate circumstances, the message is clear: cut your compliance program at the company’s risk and prepare for potential harm – risks will increase, detection by government investigators is more sophisticated and companies could suffer significant legal and reputational risks.

In these circumstances, a CCO has a responsibility – one that everyone in the profession knows – to speak up and let senior leaders know about the impact such budget cuts could have on company operations. Staying silent is not an option.

A full and frank discussion with senior leadership (and if necessary, the corporate board, is a basic minimum. If a CCO fails to initiate such a discussion, the CCO has ignored his/her fundamental responsibilities. Once the issue is discussed and senior leadership responds, the CCO will then be in a position to decide on next steps.

This article was republished with permission from Michael Volkov’s blog, Corruption, Crime & Compliance.


Tags: Reputation Risk
Previous Post

Book Review: Operational Risk Management by Ariane Chappelle

Next Post

Getting a Job in Compliance

Michael Volkov

Michael Volkov

Michael-Volkov-leclairryan Michael Volkov is the CEO of The Volkov Law Group LLC, where he provides compliance, internal investigation and white collar defense services.  He can be reached at mvolkov@volkovlaw.com. Michael has extensive experience representing clients on matters involving the Foreign Corrupt Practices Act, the UK Bribery Act, money laundering, Office of Foreign Asset Control (OFAC), export controls, sanctions and International Traffic in Arms, False Claims Act, Congressional investigations, online gambling and regulatory enforcement issues. Michael served for more than 17 years as a federal prosecutor in the U.S. Attorney’s Office in the District of Columbia; for five years as the Chief Crime and Terrorism Counsel for the Senate Judiciary Committee, and Chief Crime, Terrorism and Homeland Security Counsel for the Senate and House Judiciary Committees; and as a Trial Attorney in the Antitrust Division of the U.S. Department of Justice. Michael also maintains a well-known blog: Corruption Crime & Compliance, which is frequently cited by anti-corruption professionals and professionals in the compliance industry.

Related Posts

cfpb building sign

What Does Weakened CFPB Mean for FinServ Compliance?

by Carrie Pallardy
April 30, 2025

State-level enforcement, private rights of action & public perception all call for staying the course

turbulent waters

Compliance in Transition: Navigating Political & Regulatory Turbulence

by Anna Romberg and Julia Haglind
February 14, 2025

Returning to core values — not chasing regulatory or political shifts — is the key to sustainable compliance

following the leader

A Behavioral Economics Approach to Privacy by Design

by Vivek Agarwal
November 12, 2024

Consumer trust is everything in our increasingly digital age

trump harris commemorative magazines in rack

The Liar’s Dividend & What Corporate Leaders Can Learn From GenAI’s Impact on Election Day

by Joshua Tucker, Paul Connolly and George Vlasto
November 4, 2024

How artificial intelligence is making it harder for companies to defend themselves against false claims

Next Post
Getting a Job in Compliance

Getting a Job in Compliance

No Result
View All Result

Privacy Policy | AI Policy

Founded in 2010, CCI is the web’s premier global independent news source for compliance, ethics, risk and information security. 

Got a news tip? Get in touch. Want a weekly round-up in your inbox? Sign up for free. No subscription fees, no paywalls. 

Follow Us

Browse Topics:

  • CCI Press
  • Compliance
  • Compliance Podcasts
  • Cybersecurity
  • Data Privacy
  • eBooks Published by CCI
  • Ethics
  • FCPA
  • Featured
  • Financial Services
  • Fraud
  • Governance
  • GRC Vendor News
  • HR Compliance
  • Internal Audit
  • Leadership and Career
  • On Demand Webinars
  • Opinion
  • Research
  • Resource Library
  • Risk
  • Uncategorized
  • Videos
  • Webinars
  • Well-Being
  • Whitepapers

© 2025 Corporate Compliance Insights

Welcome to CCI. This site uses cookies. Please click OK to accept. Privacy Policy
Cookie settingsACCEPT
Manage consent

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
CookieDurationDescription
cookielawinfo-checbox-analytics11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
cookielawinfo-checbox-functional11 monthsThe cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
cookielawinfo-checbox-others11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
cookielawinfo-checkbox-necessary11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-performance11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
viewed_cookie_policy11 monthsThe cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
Functional
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
Performance
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytics
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
Advertisement
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.
Others
Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet.
SAVE & ACCEPT
No Result
View All Result
  • Home
  • About
    • About CCI
    • CCI Magazine
    • Writing for CCI
    • Career Connection
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Explore Topics
    • See All Articles
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Well-Being at Work
    • Leadership and Career
    • Opinion
  • Vendor News
  • Library
    • Download Whitepapers & Reports
    • Download eBooks
    • New: Living Your Best Compliance Life by Mary Shirley
    • New: Ethics and Compliance for Humans by Adam Balfour
    • 2021: Raise Your Game, Not Your Voice by Lentini-Walker & Tschida
    • CCI Press & Compliance Bookshelf
  • Podcasts
    • Great Women in Compliance
    • Unless: The Podcast (Hemma Lomax)
  • Research
  • Webinars
  • Events
  • Subscribe

© 2025 Corporate Compliance Insights