Transparency International USA recently published a report on the verification of anti-corruption compliance programs. The report states that compliance verification efforts are essential in assisting a company to assess whether it has an effective program for detecting and preventing corruption in its business practices. The report provides recommendations to improve the quality of internal anti-corruption programs and restore the confidence amongst investors, business partners and the general public regarding the effectiveness of these programs. In order to improve programs and restore credibility, companies should undertake both internal and external reviews on a regular basis, including reviews for program effectiveness in high risk locations, and publicly disclose their anti-corruption programs and their effectiveness.
The report states that in the current climate of “heightened concern” about corporate conduct and governance, compliance verification efforts are essential for a company to assess whether it has an effective program for detecting and preventing corruption. Transparency International (TI) explains that investors, business partners and stakeholders are looking for reassurance about the effectiveness of anti-corruption policies of companies and want to be able to differentiate between serious anti-corruption efforts of companies and programs that only exist on paper.
TI conducted research into different verification methods with the purpose to produce a practical guide. This guide is intended to help companies verify that their anti-corruption programs are well designed and are working effectively, and to restore confidence in self-regulation to strengthen the standing and reputation of companies.
The report contains recommendations that address, among other things, internal and external reviews. According to the guide, a company’s own internal review is the most critical part of assessing corporate anti-corruption compliance. Companies must determine the extent to which they can rely on in-house resources and need to supplement those resources with external resources. In defining both the appropriate scope of compliance programs and of verification, a risk-based approach is essential, according to TI.
In addition to internal reviews, TI points out that companies should undertake independent external reviews regularly. The scope and frequency of the review will depend largely on a company’s risk profile, but high risk profile companies should consider an external review of their high risk business areas every three years. TI recommends that companies perform verification in the field as well, because reviewing for program effectiveness in high risk locations cannot be done solely from the corporate centre.
In addition to conducting internal and external reviews in order to increase public trust and transparency, companies should publicly disclose their anti-corruption programs, including program implementation and verification. Finally, TI calls upon certifying organisations, companies and non-governmental organisations to develop a broader agreement on the standards for certification and to help promote greater transparency of a review’s scope.
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