The Department of Justice and the Securities and Exchange Commission released the second edition of the Resource Guide to the Foreign Corrupt Practices Act on July 3, its first update in eight years.
The resource guide details the government’s expectations for an internal control system, highlighting that it should “take into account the operational realities and risks attendant to the company’s business.” The guide suggests that different industries may be subject to different levels of expectations. A financial services company’s internal control system, for example, may be under more scrutiny than a manufacturing company.
Companies are expected to tailor their internal control systems to their industries and understand that a compliance system is not always synonymous with an internal control system. When calculating penalties or a non-prosecution agreement for a FCPA violation, the company’s compliance program will be considered. The improvements made to the program after the company was informed of a violation as well as cooperation with the investigation will also be factored in.
Also included in the new resource guide is the recent Supreme Court case limiting the scope of SEC disgorgement use, though the case also validated its use, signaling that disgorgement will still be a part of FCPA cases and the SEC will continue to use disgorgement in its prosecutions. The resource also notes the statute of limitations for criminal violations, highlighting the importance of bookkeeping and records in FCPA violations.
The resource also contains updates to compliance guidelines that emphasize sufficient resources and support given to auditors within the organization to ensure quality audits. The compliance guidelines also highlight corporate culture where management needs to take auditors seriously for changes to be effected and continuously develop a strong compliance and internal control program.
The original FCPA Resource Guide was published in 2012 as a government guidance for adherence to FCPA laws made up of questions about practices and their legality, compiling case law and government policies. The updated resource guide does not break new ground or alter any fundamental operating principles but incorporates recent case law regarding FCPA regulations to help companies understand current developments and expectations regarding compliance.
Stephanie Liu is assistant editor at Internal Audit 360°