Welcome back to the seventh edition of OIG Shorts, a publication of the Sheppard Mullin Organizational Integrity Group. Today’s discussion focuses on the thorny issue of Ethics & Compliance (E&C) program funding.
Arguing for meaningful E&C funding is no easy task in many organizations. We’ve all heard the retort “why do I need to spend this money, we haven’t had any problems?” Sadly, many business leaders still view E&C as a cost center rather than a cost reducer.
This outmoded thinking can create quite the hurdle for Chief Ethics and Compliance Officers (“CECOs”) since it is admittedly hard to measure the ROI of an initiative that, when it works, has nothing to show for it (i.e., no money coming in the door). While a Sales Department can point to revenue numbers to argue for increases in its budget, the E&C department has no similar metric. Right? Wrong.
Just because it’s hard to measure the financial benefit of an E&C program, does not mean financial benefits don’t exist. We submit there are many compelling — and financially sound — arguments for meaningfully funding E&C programs. We put them into two categories.
Category One: Risk avoidance:
The U.S. DOJ has made clear that, in evaluating corporate compliance programs in the context of making criminal charging decisions, it will look explicitly at the “funding and resources” the company has dedicated to its E&C program. Poorly funded and under-staffed E&C programs increase the risk...
Over the last year, beyond traditional healthcare and federal procurement matters, the government has pursued federal False Claims Act (FCA) investigations and enforcement across high-risk areas, i...