Crowe Horwath LLP offers advice on complying with FCPA through strong corporate governance
OAK BROOK, Ill. (Oct. 19, 2009) – Enforcement of the Foreign Corrupt Practices Act (FCPA), has skyrocketed in recent years, causing public corporations to take another look at whether their policies governing compliance are vigilant enough. Crowe Horwath LLP, one of the largest public accounting and consulting firms in the U.S., offers some tips on what corporations should be doing now to strengthen compliance and help avoid prosecution.
Designed to help prevent fraudulent activities when doing business abroad, FCPA was signed into law more than 30 years ago. However, enforcement by the U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) has increased significantly in recent years. In 2008, the DOJ and SEC collected more than $924 million in fines and penalties for FCPA violations, an eight-fold increase over the $100 million collected in 2007. The DOJ has indicated that FCPA enforcement efforts will not be scaled back any time soon, and the SEC is taking steps to enhance its enforcement.
According to Jonathan Marks, partner-in-charge of Crowe’s Fraud & Ethics group, strong corporate governance within an organization helps minimize the likelihood that foreign corruption fraud will occur or go undetected. He suggests directors and board members follow these steps to help prevent or curtail FCPA violations within their organizations:
1. Design an FCPA compliance policy that establishes ethical business practices. According to Marks, it’s imperative that the policy demonstrates a corporate commitment from top to bottom – tone at the top really does matter, so senior management must fully commit to the policy.
2. Maintain well-defined corporate governance policies and update as needed. Stay abreast of the rapidly developing FCPA regulatory environment, which changes often.
3. Communicate the importance of compliance to everyone in the organization by sending easy-to-understand information on FCPA monitoring and ongoing investigations.
4. Maintain clear lines of communication between those active in enforcing FCPA – audit committees, internal auditors and staff – and those in the executive suite charged with overseeing compliance – senior management, the board of directors and other stakeholders.
5. Monitor the activities of the board, internal auditors and compliance, legal, reporting and ethical functions to ensure that your corporate governance processes are effective and sustainable.
According to Marks, significant themes of the Sarbanes-Oxley Act and governance reform that require a high level of monitoring and attention from an organization’s board of directors also apply to the FCPA. These themes include the independence of directors and auditors, ethical corporate behavior, transparency and truthfulness of corporate disclosure and accountability of officers and directors to the investing public.
“A strong corporate governance program promotes a culture of ethical behavior and creates a positive domino effect that runs throughout the organization,” said Marks. “Directors and officers are under pressure to ensure there is a standardized approach and response to FCPA to avoid penalties, fines and even jail time. With strong governance policies in place and tested internal controls to monitor those policies, there will be less opportunity for non-compliant foreign payments that could result in an investigation.”
About Crowe Horwath
Crowe Horwath LLP (www.crowehorwath.com) is one of the largest public accounting and consulting firms in the United States. Under its core purpose of “Building Value with Values®,” Crowe assists public and private company clients in reaching their goals through audit, tax, risk and consulting services. With 25 offices and 2,500 personnel, Crowe is recognized by many organizations as one of the country's best places to work. Crowe serves clients worldwide as an independent member of Crowe Horwath International, one of the largest networks in the world, consisting of more than 140 independent accounting and management consulting firms with offices in more than 400 cities around the world.
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Contact
• Jan Lippman, 312.899.8414, jan.lippman@crowehorwath.com
• Amanda Shawaluk, 312.899.8416, amanda.shawaluk@crowehorwath.com
