Corporate Ethics & Fraud Prevention

Transcription

1 Corporate Ethics & Fraud Prevention 6th Annual ACFE & IIA Fraud Conference April 17, 2015 Karen A. Benson Director, Global Compliance & Ethics Royal Caribbean Cruises Ltd.

2 Agenda 1. Introduction 2. Organizational Culture 3. Compliance Program Essentials 4. Benefits of Compliance Programs 5. Tools & Resources

3 Introduction Explaining the Need for Compliance Compliance Babies video source:

4 What s the point of the video? Ø Ø Ø Ø Organizational culture matters Employees ethical behavior is vital Partners trust is essential Compliance programs are important The time is always right for doing what is right. Martin Luther King Jr.

5 Defining Organizational Culture Ø Every organization has a unique culture; the same way every person has a unique personality o Culture is considered the glue that holds an organization together or the compass that provides directions Ø Organizational culture is a system of shared values and beliefs that governs how people behave in organizations o Values are the assumptions that have been forwarded by the leaders of the organization and considered to be ideals that are desired by all the members of an organization o Beliefs are the assumptions about the reality and created by experience

6 Shaping Organizational Culture Ø Vision/Mission Statement Ø Values Ø Place Ø People Ø Assumptions Ø Practices

7 Effect of Organizational Culture on Ethical Behavior 2013 National Business Ethics Survey Strong Organizational Culture Weak Organizational Culture 20% misconduct observed. vs 88% misconduct observed. 60% of misconduct one-time occurrence. 82% of misconduct happened repeatedly. A copy of the 2013 National Business Ethics Survey can be accessed at:

8 Compliance Program Essentials Ø Compliance programs are developed/implemented by organizations to: o Control risk of violations of law and policy, o Promote ethical conduct,and o Maintain/enhance corporate reputation Ø While there are many legal, regulatory, organizational and societal forces impacting development of compliance programs, there s no One Size Fits All Ø There are a variety of ways to implement, monitor and audit each program based on: o Size, resources, industry, commitment and level of engagement of each unique organization

9 What s the new normal? Ø Companies are establishing dedicated compliance functions to manage the compliance program Ø Board members/audit committees are becoming much more actively involved in scrutinizing compliance programs and focusing on key compliance risks Ø Baseline screening of third parties along with enhanced due diligence Ø Active engagement between the compliance function and the business units

10 Compliance Program Structure 1 ¹ Based on guidance found in the US Federal Sentencing Guidelines, UK Bribery Act Guidance, and OECD documents

11 Organizational Oversight Tone at the Top Need visible support from the highest level Equally important is the tone at the middle Reporting Structure Designation of Chief Compliance Officer Reporting to Chief Executive Officer and Audit Committee Mgmt. Commitment Formation of Compliance Committee Cross-disciplined members/business functions Resources Adequate budget and staff Access to Management

12 Due Care in Delegation of Authority Take steps to ensure you have trustworthy employees Background checks, annual certifications Take steps to ensure you do business with trustworthy business partners Conduct due diligence Contract provisions Example: RCL s Supplier Guiding Principles

13 Code, Policies & Procedures Ø Understanding the maze of compliance requirements can be challenging Ø Cover key risk areas and make them relevant to the business

14 Training & Communication Ø Provide training to help employees understand policies and procedures Ø Use other awareness tools as needed (e.g., posters, blasts, newsletters, etc.) Ø Consider training third parties

15 Risk Assessments Ø Conduct assessments to understand where you are exposed to risk Ø Common model offered below as an example LIKELIHOOD Unlikely Possible Probable Frequent A Severe impact Medium High High High IMPACT B Major impact Low Medium High High C Moderate impact Low Low Medium High D Minor impact Low Low Low Medium

16 What keeps us up at night? Compliance risks are exponentially more complex today Ø Regulatory landscape Ø Global reach and growth in emerging markets Ø Stakeholder demand for evidence of compliance program effectiveness Ø Third party liability Ø Media and public scrutiny

17 Reporting, Discipline & Incentives Ø Offer various ways to report wrongdoing o o Supervisor, HR, Audit, Legal, Hotline Example: RCL s AWARE Hotline - One system run by a third party - Triaged by Compliance - Allegations investigated - Investigative findings reported to senior management and the Audit Committee Ø Recognize employees who do things the right way Ø Impose discipline when violations are identified

18 Auditing & Monitoring Ø Compliance provides tools for the business, but we must check the business as well o Trust but verify Ø Compliance monitoring examples: o Training completion rates o Risk assessment results o Trends in hotline and other complaints Ø Audits can be compliance-specific Ø Compliance elements can also be inserted into more general audit plans

19 Benefits of Compliance Programs 1. Enhance your company s reputation 2. Add marketing and promotional value 3. Create a culture of good corporate governance 4. Increase employee confidence in Management 5. Reduce liability if something goes wrong 6. Deter and prevent inappropriate payments, fraud and other misconduct

20 Compliance Tools & Resources Ethics Resource Center ( Provides ethics toolkit, surveys and webcasts Navex ( Provides toolkits, data sheets, case studies, benchmarking studies, legal briefs, and webinars The Network ( Provides cases studies, checklists, benchmarking studies, webinars, and hosts local events NYSE Governance Services ( Provides complimentary diagnostics, research and white papers, surveys, and videos

21 Thank You!