It is important to understand the role of the compliance officer and the conflicts of interest that may affect it. When an organization implements a compliance program, it needs someone to monitor, advise, and investigate. That person is the compliance officer.
In some small companies, the compliance officer is also the organization's director. That arrangement may create a conflict of interest for the compliance program. A conflict can also arise when the officer has responsibilities beyond overseeing the program, compromising their independence.
What conflicts of interest can a compliance officer face?
Small organizations therefore face a difficult choice when appointing a compliance officer. Codes of good corporate practice indicate that the person should:
- Be an employee of the business.
- Have substantial experience and a good reputation.
- Have sufficient standing and authority.
A similar issue arises when the head of the legal department also serves as compliance officer. For example, a PricewaterhouseCoopers (PwC) survey cited in the original article found that 48% of compliance officers did not have full independence: they also performed duties in other areas, creating potential conflicts of interest.
There are several reasons this can happen. Some organizations do not yet fully understand compliance programs; the officer's duties differ from one organization to another; and conflicts of interest are common. When one person holds two roles, the organization must manage that overlap carefully so the program remains effective.
At EthicsGlobal, we provide digital tools that support the compliance officer's independence. They help protect anonymity, reduce conflicts of interest, investigate effectively, and mitigate criminal risk.
To learn how we do this, contact us through our social media channels: Twitter, Facebook or LinkedIn.