The compliance officer as spy (among other unusual roles)

I was on a conference panel this week discussing compliance officer reporting relationships and the topic of C&E officers reporting to the audit committee came up.  I stated my general view: strong informational reporting by the C&E officer is always a good thing, but with administrative reporting the picture is mixed. (In brief, I think that the latter type of reporting can contribute to C&E office independence and “clout,” but some audit committees might not be able to provide C&E officers with the day-to-day supervision that a general counsel does, resulting in their becoming organizational orphans.) One of my co-panelists then voiced a different reason for being chary of administrative reporting to the audit committee:  other employees might take this to mean that the C&E officer is the board of directors’ “spy.”

In my nearly 25 years in the C&E field I’d never heard this view before.  My initial reaction is that it generally shouldn’t be an issue, but I also see the visceral logic of the concern.  Moreover, the person who made the comment is one of the nation’s most experienced C&E officers, and his saying it underscored for me that compliance professionals may have a view of issues relating to reporting relationships that many employees of their respective companies – who are typically less schooled in the basics of corporate governance  – may not share.

Somewhat similarly, I occasionally encounter companies where the C&E officer’s role includes representing the company in regulatory matters.   My general reaction to this has been that it is a negative with respect to the independence dimension – mostly in terms of how the C&E officer is viewed (as a defender, who might be reluctant to criticize her company) but also possibly how she acts (in ways she may not realize). On the other hand, perhaps dealing with regulators on behalf of their company would be seen as a plus in terms of clout.  As with the C&E officer as “spy,” it would be nice to know what the take of a general employee population – as opposed to C&E professionals – is on this issue.

Finally, what about  C&E officers who call themselves ombudspersons? I’ve always been troubled by this practice, as a true ombuds role requires institutional neutrality of a sort that few C&E officers have – and an employee might feel misled by this designation.  But perhaps none would actually notice or care.

Anyway, I would be interested in the views of readers of the COI Blog on these (or related) issues.

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