Survey Finds Little Connection Between Governance and Compliance at Publicly Traded Companies

Wednesday, May 19, 2010 General News
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Many Compliance and Ethics Officers Do Not Report to Board or CEO

MINNEAPOLIS, May 19 /PRNewswire-USNewswire/ -- Compliance and ethics remain farther down the pecking order at publicly traded companies than it is at either privately held or non-profit organizations. This situation persists despite all the talk of integrated Governance Risk and Compliance programs and Sarbanes-Oxley Act requirements for strong internal controls. These findings are based on a survey titled The Relationship between the Board of Directors and the Compliance and Ethics Officer conducted in the first quarter of 2010 by the Society of Corporate Compliance and Ethics (SCCE) and the Health Care Compliance Association (HCCA).

The survey reveals that boards and even Chief Executive Officers (CEO) have less contact with compliance and ethics officers than recent legislation would suggest is necessary. "This could pose a significant risk for companies as they seek to implement compliance programs that have the ability to meet both the common and legal meaning of the term 'effective,'" said SCCE Chief Executive Officer Roy Snell.

This study, conducted among approximately 500 compliance and ethics professionals, looks at the relationship between the board and the chief ethics and compliance officer (CECO) and the level of interaction between the board and the compliance team. Approximately three-quarters of the responses were from the health care industry.

The survey found that while 55% responded that the CECO in their organization reported to the board, the number was much lower for publicly traded companies: 41%. And, in companies where the CECO does not report to the board, just 32% report to the CEO.

"The proper relationship between the board and the CECO is critical to an effective compliance program," said Snell. "Without board access the compliance officer may be impeded in his or her efforts to prevent, identify, and correct wrongdoing, especially if laws or policies are violated by senior management."

Other findings

The following were among the survey findings:

For the complete survey results, click here


In an April 19, 2010 press release, the United States Sentencing Commission announced it had voted to promulgate sentencing guideline amendments which include an amendment that made various changes to the sentencing guidelines regarding the sentencing of organizations. Notably, the amendment provides encouragement (by means of potential sentence mitigation) for an organization to adopt a structure that assigns compliance and ethics officers direct reporting obligations to the governing authority of the organization. The amendment also clarifies the remediation efforts required of an effective compliance and ethics program. It describes the reasonable steps an organization should take to respond appropriately after criminal conduct is detected and to prevent further similar criminal conduct. For more:

About the HCCA

The Health Care Compliance Association (HCCA), established in 1996 and headquartered in Minneapolis, MN, is a non-profit professional membership organization made up of approximately 6,400 compliance and ethics professionals working in the health care industry. HCCA is dedicated to improving the quality of compliance. Visit HCCA's Web site at Tel: 888/580-8373.

About the SCCE

The Society of Corporate Compliance & Ethics (SCCE) is headquartered in Minneapolis, MN. Its mission: SCCE exists to champion ethical practice and compliance standards in all organizations and to provide the necessary resources for compliance professionals and others who share these principles. Visit the SCCE Web site at, Tel: 888-277-4977. Society of Corporate Compliance & Ethics is located at 6500 Barrie Road, Suite 250, Minneapolis, Minnesota 55435. E-mail:

-- Health care was more likely than other industries to have a compliance officer reporting directly to the board. -- Even if CECOs do not report to the board, there appears to be regular interaction with it. -- Meetings in executive session were relatively uncommon. -- When it comes to getting CECO's reports in front of the board, publicly traded companies are more likely to have their CECO's reports vetted prior to being shown to the board.

SOURCE Health Care Compliance Association

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