Monitoring for Compliance: The 7-Factor Framework

I say “have-to-do” because only 13 percent of respondents in our survey ranked monitoring, auditing, and reporting as the most important element of compliance for their organization. But accountability for your organization’s activities is a critical component of compliance and as important as the activities themselves.

To help, we turned to an article by ethics and compliance expert Jason Lunday—Monitoring for Compliance: A Strategic Approach, from Corporate Compliance Insights. In it, he discusses seven factors of monitoring that provides accountability while adapting to your organization’s workflow:

• Objectives: Are your organization’s activities on track and producing the desired results? Monitoring can help you identify, review, and decide how to manage unexpected outcomes.
• Timing: Monitoring can occur before, during, or after an activity. High-risk activities may require pre-activity monitoring, such as management approval.
• Comprehensiveness: The frequency of monitoring depends on the sensitivity or risk of an activity. Some transactions require careful scrutiny, while so-called “spot checks” may suffice for others.
• Monitors: Managers may delegate the monitoring of lower-risk activities to outside staff, but reserve more sensitive transactions for themselves.
• Metrics: Critical to any business process, metrics measure the outcome of an activity relative to its goal—as well as if that activity is improving when the metrics improve (or vice versa).
• Outcomes: Monitoring must do more than identify real or possible non-compliance; it must lead to activities that reduce or eliminate the risk of non-compliance.
• Factors: How and what you monitor depends on various factors: number of an activity’s transactions, the cost and ease of monitoring, the risk of non-compliance, and the reasons why employees choose to not comply.

Monitoring, writes Lunday, works in tandem with auditing. “Audit findings are intended to correct or improve a process, and part of this correction can include a process’s monitoring steps.”

He concludes, “Next to the existence of a regimented process itself, monitoring is perhaps the best tool to ensure that an activity meets its objectives. So, it is wise to use monitoring to a process’s strategic advantage…. Monitoring [should] remain as dynamic to the process itself to get the greatest value from it.”

We hope you found insights to help you strengthen your organization’s compliance program. Have a good weekend, and, once again, TGIF!