The concept of surprise in compliance investigations bears some attention. Business surprises are not usually welcome occurrences. Yet in compliance investigations, it might be the game-changer that places things in favor. A recent article published on JD Supra outlines how surprise can be a strategic tool in such contexts.
The JD Supra article cites an example of a food distributor that specialized in Asian cuisine and seafood, which had an asset-backed lending agreement with a major commercial bank. Here, the surprise element profoundly impacted the direction of the investigation. Let’s explore this idea more deeply.
In the compliance arena, the element of surprise can be effective at keeping organizations honest. It helps auditors ascertain whether companies are adhering to their claimed practices and protocols or skirting around them. When businesses are aware of an impending audit or investigation, they have the time to correct issues and hide malpractices, offering auditors a false representation of their operations. Therefore, ‘surprise checks’ can give a more accurate insight into the day-to-day operations of an organization, ultimately being more beneficial for all parties involved.
A surprise visit by auditors not only aids in inquiring into potential irregularities or violations but can also help evaluate the effectiveness of the company’s internal controls. Seeing the processes in action without any ‘preparation’ time for the company provides a realistic picture of the business’s inner workings. Thus, compliance officers should consider integrating surprise checks into their routine audits and investigations – not to catch anyone off-guard or imply malfeasance but to ensure a thorough and honest evaluation.
As compliance professionals and legal experts, it becomes necessary to make sure the businesses we guide and represent operate in the most transparent and honest manner possible. So, the next time you counsel a client or oversee an internal compliance review, remember to consider the element of surprise as a tool for garnering a genuine insight into the organization’s workings.