What Is The Focus of the Guidelines?
On April 8th, the United States Sentencing Commission voted unanimously to amend the Federal Sentencing Guidelines, including substantial amendments to the Organizational Guidelines. The new amendments will take effect on November 1, 2004. The greatest shift in thinking behind the changes in the guidelines is from a focus on compliance to a broader perspective that examines the corporate culture and the role of both ethics and compliance. Consistent with this shift in focus, the amendments made more rigorous requirements for an effective Compliance and Ethics Program and placed greater responsibility on boards of directors and executives for their oversight and management.

What Is The Reduced Sentence?
The amended Organizational Guidelines offer a reduced sentence to organizations convicted of a federal crime if that organization can demonstrate that notwithstanding the violation, it had an effective Compliance and Ethics Program in place. While these guidelines are not mandatory, organizations need to follow them closely in order to experience their benefit.

What Is The Role Of Directors And Executives?
Directors and executives must now take an active role for the content and implementation of the Compliance and Ethics Program.

What Is An Effective Compliance And Ethics Program?
To have an effective Compliance and Ethics Program, an organization shall:

1. Exercise due diligence to prevent and detect criminal conduct; and
2. Promote an organizational culture that encourages ethical conduct and a commitment to compliance with the law.

Is Training Required?
Recognizing that effective communication of corporate procedures can’t be achieved by simply creating brochures, the guidelines make effective compliance and ethics training a requirement for all of the organization’s employees within the context of an effective Compliance and Ethics Program

What Authority Is To Be Given To Compliance Officer?
The guidelines now require that the organization’s compliance and ethics officer be given adequate authority and resources to carry out their duties. This includes a direct reporting and access to the top executives.

Is Risk Assessment Required?
The amended Organizational Guidelines expressly provide, as an essential component of the design, implementation and modification of an effective program, that an organization must periodically assess the risk that criminal conduct will occur, including addressing the following:

• The nature and seriousness of such criminal conduct; and
• The likelihood that certain criminal conduct may occur, because of the nature of the organization’s business and its prior history.

What Are The Original 7 Hallmarks Of An Effective Compliance And Ethics Program?
To demonstrate the presence of an effective Compliance and Ethics program, an organization must have, at a minimum, the following key ingredients in its Compliance and Ethics Program:

1. Prevention and Detection Procedures: Establish standards and procedures to prevent and detect criminal conduct;
2. High Level Oversight: Assign specific individuals within high-level personnel an overall responsibility to oversee compliance and provide adequate resources and authority to carry out such responsibility;
3. Due Care: Use reasonable efforts not to include within high authority personnel any individual who engaged in illegal activities or other improper conduct;
4. Training and Communication: Make effective compliance and ethics training a requirement for all of the organization’s employees and agents, including the upper levels, and establish that this communication and training obligation is ongoing, requiring periodic updates;
5. Monitoring: Take reasonable steps to achieve compliance, specifically, use auditing and monitoring systems designed to detect criminal conduct, and use internal reporting systems to report or seek guidance regarding potential or actual criminal conduct, allowing for anonymity and confidentially mechanisms;
6. Consistent Enforcement: Enforce and encourage compliance through, respectively, disciplinary measures and appropriate incentives to perform in accordance with the program; and
7. Response and Prevention: Take reasonable steps to respond to and prevent further similar criminal conduct.

What Are The 10 Modifications To the Guidelines?
The new guidelines recommend 10 modifications to the guidelines. Each item is intended to synchronize the guidelines with Sarbanes-Oxley and emerging public and private regulatory requirements. The 10 recommended modifications are:

1. Tone At The Top: Emphasize the importance within the guidelines of an organizational culture that encourages a commitment to compliance with the law;
2. Conduct And Internal Control: Provide better description of compliance standards and procedures, i.e. the standards of conduct and internal control systems that are reasonably capable of reducing the likelihood of violations of the law;
3. Leadership Accountability: Specify the responsibilities of an organization’s governing authority and organizational leadership for compliance;
4. Resources and Authority: Emphasize the importance of adequate resources and authority for individuals with the responsibility for implementing a Compliance and Ethics Program;
5. History of Violations: Replace “propensity to engage in violations of the law” with a more objective requirement of determining if there is a “history of engaging in violations of the law”;
6. Conduct Training: Include both training and dissemination of training materials within the definition of an effective Compliance and Ethics Program;
7. Evaluate Programs: Add periodic evaluation of the effectiveness of a Compliance and Ethics Program to the requirement for monitoring and auditing systems;
8. Risk Assessment: Provide for the ongoing risk assessment as part of an effective Compliance and Ethics Program;
9. Encourage Employees: establish a system for employees not only to report actual violations, but also to seek guidance about potential violations, in order to encourage prevention of violations; and
10. Whistleblower System: Require a mechanism for anonymous reporting.

The 7 Keys to Implementing an Effective Compliance and Ethics eLearning Program in Your Organization Sarbanes-Oxley and other regulatory requirements require organizations to implement an ‘effective compliance program.’ Unfortunately, many organizations achieve inadequate results from the considerable time and money spent to improve training completion rates, comprehension, and reduction in workplace incidents. PLI-Corpedia would like to share seven tips that will assist you in implementing ‘an effective compliance program’ in your organization and increasing workforce participation and usage.

1. Understand the necessity of the program and make the commitment
   Implementing an effective compliance eLearning program is a preventive measure against misconduct, and it also demonstrates a commitment to encouraging ethical behavior. Not all programs are created equally, however. If it looks like ‘window dressing’ to your employees, it will not be taken seriously and will not sufficiently protect you in the event of a lawsuit or claim.
2. Set the proper tone from the top
   When senior management is truly engaged in the compliance and ethics training program initiative, it significantly increases the likelihood that it will be embraced by all employees, because they will see that it is an important part of the corporate culture.
3. Understand that technology is half the battle
   Corporations often undervalue the importance of technological simplicity in eLearning programs. While the content must be accurate and engaging to educate employees, it is also important for the program to be easy to use. When a program has too many ‘bells and whistles,’ it can lose its functionality and effectiveness.
4. Be demanding and invest in quality – it is less expensive than you think
   Often, the implementation of an enterprise-wide compliance and ethics training program is the employees’ only exposure to the effort of the corporate legal department. Therefore, the quality of the programs and underlying technology directly affect how employees consider their corporation’s commitment, or lack thereof, to compliance and ethics. Basic PowerPoint or click-and-read eLearning programs convey that the organization does not take compliance and ethics seriously.
5. Respect employees’ time
   Well-designed eLearning programs balance subject relevance and program completion time. An imbalance of these concepts either builds employee resentment over long programs that divert employees from their primary responsibilities, or decreases comprehension and retention due to material irrelevant to the learner, over which they lose interest.
6. Demand that vendors disclose any possible conflicts of interest
   It has become increasingly vital that boards of directors ensure their organization’s business dealings reflect ethical and fair transactions at all times. Therefore, you must make sure your outside advisors do not have a conflict of interest when recommending a particular solution to your organization. You will spare yourself aggravation and embarrassment later.
7. Learn from open standards, best practices, and the experiences of others
   Historically, it has never been easy to implement effective eLearning compliance programs, because it must successfully merge company culture, technology, adult instructional design, and the law itself. Fortunately, there are pioneers in this industry that share their experiences and insights on best practices. Organizations looking to benefit from this knowledge may look to such leading groups as:
   • The Ethics Resource Center (ERC). A 75-year old nonprofit organization based in Washington, D.C., and dedicated to the promotion of ethical behavior globally.
     www.ethics.org
   • The Open Compliance & Ethics Group (OCEG). A nonprofit organization based in Washington, D.C. that is dedicated to the research and publication of best practices in compliance education and supporting processes.
     www.oceg.org
   • The Corporate Compliance Institute. A series of annual educational and networking conferences held by the Practising Law Institute (PLI) at various venues throughout the United States.
     www.pli.edu