The DOJ Evaluation Guidance – A Roadmap to Compliance

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By Sascha Matuszak
Reporter, SCCE|HCCA

It’s been more than a year since the Fraud Section of the Department of Justice issued its Evaluation of Corporate Compliance Programs (Evaluation Guidance), but it is helpful to revisit this document to be reminded of what the DOJ looks for in a compliance program and some of the questions they would ask during a criminal investigation. The document begins by explaining the thinking behind releasing this type of guidance: The decision to initiate a criminal investigation into a corporation is governed by the so-called “Filip Factors” (Michael Volkov has a quick summary here), and those factors include the existence and effectiveness of the corporation’s pre-existing compliance program. See this passage from the Evaluation Guidance itself:

Because a corporate compliance program must be evaluated in the specific context of a criminal investigation that triggers the application of the Filip Factors, the Fraud Section does not use any rigid formula to assess the effectiveness of corporate compliance programs. We recognize that each company’s risk profile and solutions to reduce its risks warrant particularized evaluation. Accordingly, we make an individualized determination in each case. There are, however, common questions that we may ask in making an individualized determination. This document provides some important topics and sample questions that the Fraud Section has frequently found relevant in evaluating a corporate compliance program.

The Topics in Question

The Evaluation Guidance contains eleven sample topics, each followed by several questions related to that topic. The list is not exhaustive but provides enough of a framework that a competent compliance officer could use this document as a road map toward creating an effective compliance program. Ricardo Pellafone outlined ways to implement this guidance for our blog last August. Pellafone’s method is to approach the Evaluation Guidance with a project planning point of view, and to think in terms of business processes instead of topics and questions, as the DOJ has it laid out. It’s a very useful post and recommended reading.

For those who want to tackle the project on their own, using primary sources, here are the topics:

  • Analysis and Remediation of Underlying Misconduct
  • Senior and Middle Management
  • Autonomy and Resources
  • Policies and Procedures (a. Design and Accessibility; b. Operational Integration)
  • Risk Assessment
  • Training and Communications
  • Confidential Reporting and Investigation
  • Incentives and Disciplinary Measures
  • Continuous Improvement, Periodic Testing and Review
  • Third Party Management
  • Mergers and Acquisitions

Each topic is followed by the types of questions an investigator would ask in order to determine, among other things, what the company in question has done to assess risk, enable compliance officers, and adequately inform and train staff. Law firm Baker McKenzie put together an informative summary of the Evaluation Guidance, including commentary on the questions and topics. They conclude that this type of guidance, demonstrating the Fraud Section’s growing expertise in the compliance field, is a welcome and helpful development:

“The prevailing message from the Evaluation Guidance, however, is that companies themselves must take ownership of their programs, adequately resource them, properly tailor and integrate them into their business, and regularly update and enhance them. The Fraud Section is becoming increasingly refined in its ability to evaluate compliance programs and test whether the programs are functioning as expected. We expect this trend to continue.”

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