Compliance Deloitte

Testing and Monitoring: The Fifth Ingredient in a World-Class Ethics and Compliance Program

Sponsored by Deloitte

Testing and monitoring are critical elements of an effective ethics and compliance program. Without testing, it’s difficult or impossible to understand what’s working and what needs enhancement. Monitoring serves as an early warning system.

Testing and monitoring is one of the most critical elements of an effective ethics and compliance program, and is a required program component in certain industries. Why? Because without testing, it is difficult or impossible to understand what is working and what needs enhancement. Similarly, robust monitoring programs serve as an early warning system that allows compliance professionals to identify—sooner rather than later—potential compliance issues.

Key differentiators

What separates a “good” ethics and compliance program from a “great” one? While there are a number of factors that separate the “good” from the “great,” in our experience, there are five factors that are key differentiators in the highest performing compliance programs:​

Testing and monitoring

Many ethics and compliance professionals use the terms “testing” and “monitoring” interchangeably. While testing and monitoring may be two sides of the same coin, and one cannot be fully optimized without the other, they are not interchangeable. In fact, both their design and desired outcomes are quite different. Commonly recognized definitions of each are as follows:

  • Testing program: A dynamic, risk-based, independent compliance oversight process designed to periodically select and review a sample of business products, services, communications, and other areas to gauge and report on the operating effectiveness of compliance controls and/or adherence to stated policies and procedures.
  • Monitoring program: The ongoing surveillance, review, and analysis of key business performance and risk indicators that allows the organization to identify potential compliance violations. While many seek to implement “automated” monitoring programs, monitoring activities can be either automated or manual.
Great testing programs have a number of common attributes:
  • Compliance is tested at the level of accountability
  • Programs draw on a range of skillsets
  • The program is designed using a risk-based approach
  • They are repe​atable and statistically valid
Great monitoring programs have a number of common attributes:
  • The key risk and performance indicators the program monitors are meaningful
  • Program owners understand how to harness the power of data
  • As with testing, repeatability is key
As organizations look to establish best-in-class ethics and compliance programs, testing and monitoring is one of the essential components they need to build and leverage. With robust testing and monitoring programs, a company can not only gather critical information on weaknesses in their compliance program, they may also have advanced warning of any looming problems before they become significant and potentially damaging. That alone makes testing and monitoring one of the key ingredients of a world-class ethics and compliance program.

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For additional information, please join us on Thursday, September 24 at 2:00 pm Eastern for a one-hour Dbriefs webcast “Testing and monitoring in ethics and compliance programs.” Click here to register for the webcast.