Ethics vs. Compliance
David Dunkelberger
Listen to: "Ethics Versus Compliance: Drawing a Distinction Between These Two Professions"

When creating company policies, training and programs, there will be times when what you do for the company may not be ethical or meet compliance regulations. In these cases, having a professional versed in compliance and ethics allows for you to audit business procedures and objectives to ensure they align to the corporate culture you are trying to create.

Unfortunately, the words compliance and ethics can be confusing. Often the two terms will be used interchangeably in the professional world. One company will have a Chief Ethics Officer, another company may have a Chief Compliance Officer and a third company may combine the job title into a Chief Ethics and Compliance Officer.

Compliance Focuses on the Rules of the Law

The compliance profession is pretty straightforward, but does have some misconceptions surrounding it. Basically, your company must abide by the rules and policies set forth to prevent a violation of that law. Often, compliance violations can result in serious consequences that can involve fines, jail time, liabilities and firing of involved employees. There is no way to skirt around compliance policies and still have legal operations. This is one of the tasks that your Chief Compliance Officer handles in your operations.

Ethics Involves a Moral Judgment of Doing What is Right

When talking about ethics, your company is focusing on what is best morally. You are following a code of behavior in practicing what is right to the benefit of your company, its employees, its customers, the environment and other factors. Your Chief Ethics Officer will normally monitor employees and their procedures to look for allegations, conflicts of interest, improprieties and complaints that can create corporate governance issues.

Ethics can be extremely important to the company culture. It can benefit your company not only in its operations but also as a branding tool. You can build customer and employee trust that you are working to create an ethical corporate environment as well as business interactions.

Ethics Does Not Equate to Compliance

While compliance and ethics can overlap in many ways, you should never assume that employees will comprehend the difference. People have different ethical beliefs on what they know is right and wrong which may not follow the company’s objectives. Also, your company can always do something that is unethical yet still be within the lines of meeting compliance standards.

While most employees will see bribery of government officials to win federal contracts as falling into noncompliance and also being an ethical issue, they may not see the situation as an ethical problem when they bestow lavish gifts or vacations to private vendors or business partners. There also may not be an actual compliance regulation preventing the employee from doing such an action, yet it is still frowned upon within the company.

Also, just because there may be a local, state or federal compliance regulation regarding a certain company procedure doesn’t mean that you have to do the bare minimum in staying in compliance. You can be proactive with your policies and take additional ethical steps to further do what is morally right.

Staying on Top of Compliance and Ethics in Your Business

When you consider compliance and ethics, whether evaluating business policies or creating a company culture, you need to look at both professions as separate entities. Having a Chief Compliance Officer and a Chief Ethics Officer allows you to tackle a range of risks in your operations from every angle to address both compliance and ethics issues without blurring the lines between the two concepts.

Just remember what is involved with these two professions. A Chief Compliance Officer will oversee any compliance issues that may be found or created during the course of your business operations and minimize risks so your company can maintain compliance. A Chief Ethics Officer will look for allegations, conflicts of interest and improprieties that won’t violate compliance standards yet may violate company governance policies and internal programs.

Auditing Both Compliance and Ethics Policies

It is vital to continually audit your company operations and objectives to ensure that not only is your company meeting compliance standards to avoid penalties and liabilities, but to also check for ethics violations in internal processes that may go against created company programs and procedures. I.S. Partners is a certified CPA firm that can perform internal audits and compliance audits for your company by finding gaps that can put your company at risk. Send us a message or call us at 215-675-1400 today so you can find out how we can improve your corporate policies, objectives and training so you meet both compliance and ethics standards.

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