Conflicts of Interest: 7 Best Practices for Implementing a Successful Disclosure Process

The Challenge

You don’t need to look any further than today’s headlines to find the latest scandals involving the failure to disclose actual or potential conflicts of interest. As a result, compliance teams go to great lengths to ensure that employees can comply with their disclosure obligations.  They provide training on policies, require annual certifications, and encourage them to proactively disclose any real or potential conflicts of interest as soon as possible.

Even with these measures in place, many disclosure processes are manual and cumbersome, frustrating employees and discouraging disclosures. Moreover, employees are often only asked to disclose once a year (during the annual certification process) creating a “gap” between the activity that gives rise to the conflict and the disclosure itself.  Now with more employees working remotely, the need to have efficient and consistent disclosure processes and systems in place is more important than ever. 

The Approach

As we work with customers to simplify and automate their disclosure processes, we have identified seven (7) best practices that eliminate confusion and improve the disclosure experience for all involved: 

  1. Keep it Simple. Effective disclosure processes make it easy for employees to disclose. Keep disclosure forms short and the workflow/approval process even shorter. The goal is to get employees to disclose, not to get every minute detail of the disclosure up front. Structure the process so that employees can submit a disclosure easily and get a response quickly. Reviewers can follow-up as needed to gather additional information or gain additional insights. 

  2. Make it Convenient.  Don’t make employees go out of their way to submit a disclosure. Make the solution easily accessible (via an intranet site) and available on any device. Today’s cloud-based systems make this an easy win. In addition, tie the disclosure process to the underlying business activity to maximize compliance and reinforce positive behavior. Embed disclosure links wherever there is the potential need for a disclosure including in business processes, policies, annual certifications, and compliance training. 

  3. Nudge.  Provide regular reminders including targeting at-risk employees and ongoing reminders tied to the underlying business activity (i.e. when booking travel and entertainment; onboarding a new employee, customer or supplier; conducting third party due diligence; etc.). Include up-front attestations to maximize truth and accuracy in the disclosure.

  4. Provide Transparency and Consistency.  The disclosure process should be transparent and allow for open communication between the employee and reviewers/approvers. Once a decision has been made, the rationale for the decision and any actions to be taken should be clearly and consistently communicated to the employee. Disclosure resolutions should also be consistently applied to promote organizational justice.

  5. Follow-up.  Where follow-up actions are required, creating a clear plan of action is critical to the credibility of the program. For example, where a conflict exists, ensure that the conflict is documented, and that any remedial measures or internal controls are equally documented, implemented and monitored on an ongoing basis.

  6. Maintain Documentation.  Insure you maintain a simple and consistent record of conflicts, communications, resolutions and follow-up actions and controls. Modern disclosure software with full audit trails accomplish this automatically. With high turnover rates and often long time periods between disclosures and the issues that raise from them, a history of who did what and what transpired is critical.

  7. Review and Adjust.  Have the ability to quickly adjust your process and your disclosure questions when changes are needed.  Configuration is key. Don’t be locked into a static process that does not reflect your ever changing business environment nor the needs of your program.

The Conclusion

With these 7 best practices, every organization can achieve a simple and effective disclosure process for everything from conflicts of interest to gifts and entertainment. Modern software solutions automate many aspects of the disclosure process and incorporate these best practices as standard features. With a more automated and efficient disclosure process, you will increase disclosure rates, drive higher levels of engagement with your employees, and bring greater visibility and compliance with your company’s policies and objectives. 

     

    Dynamic Disclosures

    Informed360’s Dynamic Disclosures solution allows organizations to complete all disclosures from Conflicts of Interests to Gifts & Entertainment in a device friendly and intuitive interface.  With a high degree of configurability, organizations can quickly and easily adjust best practice forms and approval processes to meet their specific needs.  Seamless integrations with customers’ other systems allow for easy access and significantly reduces the time and effort to complete and review disclosures.   

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