Surprise!
Hi, Colleagues. Here is a question I find troublesome. Should your antitrust compliance program include surprise audits? The Antitrust Division, in its U.S. Department of Justice Antitrust Division, Evaluation of Corporate Compliance Programs in Criminal Antitrust Investigations 10 (July 2019) https://www.justice.gov/atr/page/file/1182001/download , asks
“What monitoring or auditing mechanisms does the company have in place to detect antitrust violations? See USSG §8B2.1(b)(5)(A). For example, are there routine or unannounced audits?" (emphasis added).
Note that guidance documents from other government agencies in other risk areas the Criminal Division’s evaluation document does not include this reference to unannounced audits.
Nor it this new for the Antitrust Division. In guidance from the Division after the Sentencing Guidelines took effect, Neil Roberts, Chief of the Legal Policy Section of the Antitrust Division, in a piece published in the Summer 1992 edition of Corporate Conduct Quarterly p. 2, in “Antitrust Compliance Programs Under the Guidelines: Initial Observations From the Government’s Viewpoint,” stated:
“Both regular and unannounced audits of price changes, discount practices and bid sheets, conducted by those familiar with the firm’s past and present businesses practices and trained in recognizing questionable divergence, would be examples of creditable affirmative action.” (emphasis added)
What do you think? Is doing unannounced or surprise audits a best practice and something the government should expect? Does it send an appropriate signal of deterrence to employees? Or does it conflict with an environment of trust and values, and undermine the culture? How would you feel personally if your employer did surprise reviews of what you were doing? Would it signal that the company was committed to doing the right thing, or would it backfire and undermine your trust in the company?
Thanks,
Joe
Avvocato | Risk & Compliance Acea Energia
3 年Hi Joe, here is my experience. Last week I did a “surprise” antitrust audit for the first time. Even if the audited colleagues did not react well to the choice not to notify them earlier, the audit report showed that it was very effective!
Manager Contracts @ Bumi Armada | Projects, Contracts, Negotiations
3 年I think it takes a series of focused training sessions to explain to your employees that such audits aren't a threat to their privacy in the first place, as many tend to mistakenly extend their privacy boundaries to their workdesks, whereas commitment to transparency is only reinforced through exposure to unexpected audits. On the other hand, employees need to be assured that flaws or discrepancies discovered during such audits, excluding any serious and / or reportable transgressions, must be viewed as opportunities for improvement, not grounds for punishment.
Cofounder of HCCA and SCCE
3 年I have pondered surprise audits for years. When I was at Mayo we had planned audits from JCAHO (an accreditation body). Before they showed up (I think every 2 years) we had a huge fire drill to get everything right. I would joke that we had to get our lunch bags out of the lab fridge before they showed up. I think some health care entities would hire a specialist consulting firm to get ready for the audit. The auditors consisted of doctors and technicians from other heatlcare entities who may or may not had a bias towards being nice to Mayo because everyone loves the Mayo Clinic… am I right? Other than that, it was completely independent. The process later changed to surprise audits because some people found the planned audits ineffective. Audits were added for certification in other states and at one point there were 24 audits a year of some of the Mayo labs.
The Voice of Compliance*Founder of The Compliance Podcast Network*Evangelizing for and Serving the Compliance Community
3 年Joe-perhaps there could be an intermediate step such as ongoing monitoring. That way you can let employees know you will be testing them on an ongoing basis without a surprise audit. This could also satisfy the government requirement if the ongoing monitoring were well-documented with bi-annual or other regular audits.
Attorney | Consultant
3 年I think there are two factors - the industry/sector and the size of the organization. Bank tellers know there is the potential for surprise cash counts from a bank internal auditor. And unannounced internal audits are not uncommon in very large organizations or the government. Having unannounced audits can be a great step to effectuate compliance; however, it can also cause mistrust and culture issues within an organization. I believe it is a classic 'it depends' question, based on industry/sector and entity size. I wonder what is the minimum size an entity must be (100 EE; 500 EE; etc.) before unannounced audits are not regarded by employees as attacks on personal credibility.