importantly, management must support the mission
statement and code of ethics with demonstrable action,
including assessing business transactions by considering
how a transaction would be viewed if reported in the media.
Establish an Ethics Compliance Officer
Regardless of a contractor’s size, it is important for this
officer to ensure its company’s ethics compliance program
is in place and performing as expected. Appropriate
candidates must have the ability to read and interpret
business contracts and the laws and regulations imposed by
the government bodies and contracting organizations. They
must have direct access and report to senior management,
yet must also be willing to challenge management.
Larger companies often prefer to bring in an outsider to
perform this role to avoid conflicts of interest caused by
organizational history. Smaller companies may not have this
luxury; however, they should avoid utilizing the company’s
in-house counsel to perform this function. While the
in-house counsel focuses on the company’s best interests,
the ethics compliance officer reports ethical violations.
Develop Employee Ethics
Training and Ongoing Awareness Programs
It is clear that part of an effective compliance program
is to regularly hold training/awareness programs for all
employees. What may not be as clear is that the training
program should be regularly updated to reflect changing
risks. Every construction job presents unique compliance
risks based on the project type, subcontractors, unions, etc.
The training program should be sufficiently fluid to address
these changing risks as contracts are awarded. In the
future, it is likely that trade organizations will partner with
consultants to provide some level of training to employees
(similar to OSHA training) so that smaller employers aren’t
fully responsible for the training costs.
Establish Internal Controls and Procedures
The foundation of a comprehensive system of internal
controls and procedures reduces the possibility of
noncompliance with laws, regulations, and company
policies. Top management should be apprised of the results
of the procedures performed so substantive changes can be
made if necessary. If the contractor can uncover improper
conduct in a timely manner, it is more likely that corrective
measures can be taken before a significant issue develops.
Create a Whistleblower Hotline
According to the Association of Certified Fraud Examiners’
(ACFE) 2012 Report to the Nations on Occupational Fraud
and Abuse, more than 40% of fraud schemes are exposed
by tips. However, too many organizations implement a
hotline program without a focused plan to investigate the
tips. While most projects tied to a public agency IG will have
a hotline to report tips directly to the agency, contractors
still need to have their own whistleblower hotline as part of
their overall ethics compliance efforts.
If a violation is suspected, the ACFE
recommends a seven-step program of action:
•
Conduct an initial assessment
•
Interview the whistleblower
•
Collect documents and evidence
•
Conduct a financial risk analysis
•
Interview witnesses
•
Analyze the evidence and determine proper resolution
•
Take action to resolve the matter
24 Building Washington
