From a compliance and risk management perspective, conflicts of interest (COI) disclosure require both prompt and clear disclosure, along with documented evidence of appropriate action taken by HR/Compliance once the disclosure has been made. Failure to do so can create significant damage to your company’s reputation, even if no inappropriate conduct occurs, along with substantial penalties for non-compliance.
However, the dismissal of COIdisclosure as a tedious chore that requires nothing more than formal renewal of the disclosures once they have been made, can place your company at an even greater risk.COIdisclosure should never be treated as a checklist item. It must be managed as the first step of a far more rigorous process.
If we operate on the basis that employees will simply fill-in and return the COI disclosure forms, we are making assumptions that, first, they understand what a COI is, and second, that full disclosure is an automatic response. The former overlooks the constant challenge that compliance departments face in explaining that just because there has been no impropriety doesn’t mean that the COIdoesn’t exist. The latter ignores the ever expanding list of SEC and DOJ cases documenting COI’s at the highest levels of the country’s largest organizations involving the same executives who issue the reminder emails to their employees about COI disclosure.
Building on a solid foundation of new employee orientation and refresher training, submitted disclosure forms should initiate three additional steps for comprehensive COI management:
When disclosure is treated as a checklist item, the form submission and subsequent annotation on an Excel spreadsheet can often mark the end of the matter, but as compliance continues to increase in complexity and potential expense, effective COI management demands that each submission be reviewed in detail by assigned personnel. This review should also include requests for any additional documentation needed to support the subsequent approval or denial of the COI.
The tendency to focus on disclosure and cyclical renewal of that disclosure conveniently overlooks the possibility that the disclosed COImay be severe enough to warrant a more substantive response than a signed form. Depending on the specific variables of the situation, the employee may be required to recuse himself from a relationship, formally resign from a position that might offer a perception of impropriety, or even resign from the position for which he has been hired by the organization. Each of these potential outcomes will require detailed documentation in the likelihood that the employee in question disagrees with the interpretation of the perceived COI and elects to pursue the matter further.
3. Ongoing Supervision
The standard practice of getting sign-off on the disclosure form and then forgetting about it until it comes up for renewal, underestimates the speed with which such COI relationships can change in modern commerce. Approving a disclosed COIshould trigger a process of ongoing supervision to ensure that the terms of the arrangement do not change (before the next review) beyond the company’s established risk parameters. For companies that struggle from one compliance issue to another, this can be the most challenging of the three steps.
Our Conflict of Interest Disclosure Software on SharePoint offers the functionality and security needed to maintain a fully compliant and proactive COImanagement policy. Microsoft Active Directory is leveraged to both notify all new hires of the COIdisclosure requirement and to assign relevant personnel to the review and approval of all submitted disclosure documents. Custom form capabilities and real-time task assignment and monitoring ensure that all documentation is handled promptly and stored in a secure environment.