Evaluation of Corporate Compliance Programs: Analysis and Remediation of Underlying Misconduct and S

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The following article is about new guidance from the Department of Justice
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Evaluation of Corporate Compliance Programs: Analysis and Remediation of
Underlying Misconduct and Senior and Middle Management

Fraud enforcers recently declared that their expectation is that every
provider has a Compliance Program. Consequently, enforcers will now focus
on implementation of quality Compliance Programs. As part of this new
focus, the U. S. Department of Justice (DOJ) issued new guidance on February
8, 2017, entitled "Evaluation of Corporate Compliance Programs." This new
guidance provides a "road map" for providers to use to evaluate their
Compliance Programs, including the factors that regulators are likely to
take into account.

Specifically, the U.S. DOJ provided sample topics and questions it is likely
to use to evaluate providers' Compliance Programs. These factors include
the Analysis and Remediation of Underlying Misconduct and Senior and Middle

Analysis and Remediation of Underlying Misconduct

Specifically, here are the factors that the DOJ will use to evaluate
analysis and remediation of underlying misconduct:

- Root Cause Analysis - What is the provider's root cause analysis of
the misconduct at issue? What systematic issues were identified? Who in
the company was involved in making the analysis?

- Prior Indications - Were there prior opportunities to detect the
misconduct in question, such as audit reports identifying relevant control
failures or allegations, complaints or investigations involving similar
issues? What is the company's analysis of why such opportunities were

- What specific changes has the company made to reduce the risk that
the same or similar issues will occur in the future? What specific
remediation has addressed the issues identified in the root cause and missed
opportunity analysis?

Senior and Middle Management

Here are the factors that the DOJ will use to evaluate senior and middle

- Conduct at the Top - How have senior leaders, through their words
and actions, encouraged or discouraged the type of misconduct in question?
What concrete actions have they taken to demonstrate leadership in the
company's compliance and remediation efforts? How does the company monitor
its senior leadership's behavior? How has senior leadership modeled proper
behavior to subordinates?

- Shared Commitment - What specific actions have senior leaders and
other stakeholders; such as business and operational managers, finance,
procurement, legal, human resources, etc.; taken to demonstrate their
commitment to compliance, including their remediation efforts? How is the
information shared among different components of the company?

- Oversight - What compliance expertise has been available to the
Board of Directors? Have the members of the Board of Directors and/or
external auditors held executive or private sessions with compliance and
control functions? What types of information have members of the Board of
Directors and senior management examined in their exercise of oversight in
the area in which the misconduct occurred?

In short, it's a brand new compliance game! Providers' focus must change
from developing Compliance Programs to ensuring implementation using the
factors above, among others.

C2017 Elizabeth E. Hogue, Esq. All rights reserved.

No portion of this material may be reproduced in any form without the
advance written permission of the author.
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