The goal of any conflict of interest program is simple: drive 100% participation. But getting there can feel complex. The road to total compliance is paved with countless milestones between the intake of a disclosure and the remediation of the conflict of interest—and that’s without considering the training it takes to encourage compliance among all covered employees.
Compliance officers naturally have questions about building or improving their compliance program. In a recent white paper, we detailed our responses to 12 common compliance questions. Let’s start with the six questions we receive most from our clients and colleagues in compliance.
1. What are Conflicts of Interest, and Why are They Detrimental?
A conflict of interest happens when a person enters a relationship that overlaps or conflicts with their existing relationship. This person now has competing loyalties, as a decision in the interest of one relationship might actually take advantage of the other.
The more formal definition of conflict of interest comes from the G-20 Anti-Corruption Action Plan, which states that conflicts of interest arise when the interests of a person deviate from the interests of the organization to which they belong.
Though this may seem innocuous, conflicts of interest can actually trigger a host of regulatory compliance issues. An example of a conflict of interest we reference in the white paper is a member of a university’s board who also leases land to that university. While not impermissible, media, donors, regulators, and others might create alarm surrounding the conflict.
These types of COIs can be a signal of malfeasance for politicians and regulators, which is why corporate entities must have a conflict of interest program.
2. How Does the Government Police Conflicts of Interest?
According to the government, conflict of interest management is just one piece of an effective compliance program. The challenge is identifying what “effective” really means when it comes to compliance. The U.S. Department of Justice utilizes the following three criteria to evaluate whether or not compliance programs meet their standard:
- Is the compliance program well designed?
- Is the program being implemented effectively?
- Does the program work in practice?
These considerations are fundamental to investigations and might weigh more heavily than even the case’s facts. Effective compliance programs can ensure organizations remain compliant according to these standards.
3. Who Should Oversee Conflict of Interest Programs?
Conflict of interest programs require management at both the daily and the oversight level. On a daily basis, organizations should have a dedicated compliance officer responsible for addressing conflicts of interest. This person might delegate some parts of the process, but they should be the ones monitoring procedures and quality control.
Organizations will also need a committee to oversee conflict of interest policies. This committee should review the conflict of interest categories their organization receives and make the final decision on whether or not they follow the COI policy.
4. What Training and Education do COI Professionals Need?
Compliance best practices can change year over year, as can government expectations surrounding conflict of interest management. Though compliance officers should receive an initial training on their organization’s conflict of interest policies and procedures, they should also attend annual training so they can keep their organization up to date.
Compliance officers should also bring annual learnings back to the board so they’re up-to-date as well. In the white paper, we suggest that organizations adopt the best practice of sending the compliance officer and one board member to a COI training conference every year.
5. What Should the Conflict of Interest Management Process Look Like?
In the white paper, we cover nine steps that effective compliance programs should address in order to successfully navigate conflicts of interest. But before implementing any of them, compliance officers must first work with their board of directors to create a conflict of interest policy. This policy will then govern the eight steps of conflict of interest management.
The first of these is to establish a method of COI disclosure, whether that’s a form, a dedicated phone line, or even a kiosk on the factory floor. With this in place, organizations should identify which employees must fill out disclosures, then create an annual schedule for collection. If an employee encounters a new conflict, they should also fill out a midyear disclosure.
Disclosures in hand, organizations should have a dedicated executive review and categorize conflicts to identify which aren’t actual conflicts, which require oversight, and which should be resolved. A committee should then review and verify these assigned categories before sending significant conflicts to the board for their review.
From there, organizations should implement an annual board review of conflict of interest policies to ensure they meet regulatory standards. As an additional level of compliance, compliance officers can also set up independent conflict of interest audits at fixed intervals to ensure the program is always operating efficiently and effectively.
6. How Does Technology Improve Your Conflict of Interest Program’s Success?
Conflict of interest management can be labor intensive. But it’s not enough to have employees fill out disclosure forms then stash them in a filing cabinet. Technology can make compliance part of the compliance officer’s day to day, but also the day to day of covered employees.
Conflict of interest management software makes it easier to not only accept disclosures, but also follow up on them. No matter how solid an organization’s intake process, their system could still fall apart if they’re trying to manually manage hundreds or even thousands of conflicts of interest.
Technology can scale up their program and ensure that no conflict of interest slips through the cracks. At the same time, it can analyze and visualize data so that compliance officers can build a better business based on insights gained from common conflicts. All of this will reduce the risk of mishandling conflicts, move the organization closer to total compliance, and solidify their organization’s competitive edge.
An effective compliance program should be built with one goal in mind: 100% compliance. Though this may sound daunting, what’s worse is the risk associated with anything less than total compliance. Whether you’re a seasoned compliance officer or are new to conflict of interest management, it’s never too late to put your organization on the path to a better business.
Download the white paper for more answers to the most common questions regarding conflict of interest management.