Creation of Roundabout and Operationalization of Compliance

by Thomas Fox

Readers of this blog know of my love for progressive rock music and that my favorite prog rock group is Yes. You might understand how thrilled I was when the Wall Street Journal (WSJ), of all places, ran an interview with three of the remaining members of the band about the creation of their seminal hit, Roundabout. The article featured comments from Steve Howe, Rick Wakeman and Jon Anderson.

It detailed how the song began with Anderson penning the initial lyrics during a haze-filled drive through the west of Scotland in an enhanced condition. Their route included roundabouts, winding roads, deep valleys and even Anderson missing his wife, all of which made it into his lyrics. After they returned to the studio, Howe laid down the rhythm tracks and then he and Wakeman added the flourishes for iconic lead guitar opening, organ and keyboards. It all came together when the full band entered the studio to lay down the vocal tracks and for the first time the band sang harmony to end the song.

In addition to giving me all the excuse I needed to listen to the song on a continuous loop all afternoon at volume 11, it gave me another insight into the theme from the recently released Department of Justice (DOJ) Evaluation of Corporate Compliance Programs (Evaluation). Just as the song was the creation of several very talented people, any corporate compliance program is also the result of a collaboration of multiple persons and disciplines within an organization.

The Evaluation emphasizes the operationalization of your compliance program. Obviously a Chief Compliance Officer (CCO) cannot accomplish either alone or even with an entire compliance department. However, the manner in which the DOJ laid out its inquiries in the Evaluation can help any CCO or compliance professional to create a roadmap to move compliance directly into the fabric of every organization.

One need only consider the questions posed in Prong 4B, b. Operational Integration;

  • Responsibility for Integration – Who has been responsible for integrating policies and procedures? With whom have they consulted (e.g., officers, business segments)? How have they been rolled out (e.g., do compliance personnel assess whether employees understand the policies)?
  • Controls – What controls failed or were absent that would have detected or prevented the misconduct? Are they there now?
  • Payment Systems – How was the misconduct in question funded (e.g., purchase orders, employee reimbursements, discounts, petty cash)? What processes could have prevented or detected improper access to these funds? Have those processes been improved?
  • Approval/Certification Process – How have those with approval authority or certification responsibilities in the processes relevant to the misconduct known what to look for, and when and how to escalate concerns? What steps have been taken to remedy any failures identified in this process?
  • Vendor Management – If vendors had been involved in the misconduct, what was the process for vendor selection and did the vendor in question go through that process?

This Prong specifies as well as any other the concentration of the DOJ on the operationalization of a corporate compliance program. It points directly to business unit personnel being responsible for the integration. Not queried in the Evaluation, but obviously a key part of adhering to the Evaluation, is how well you have documented this involvement (as in: Document, Document, and Document) by business unit personnel.

As CCO when was the last time you went down the hall to have a chat with the payroll folks? Based on the Evaluation my suggestion would be that you have this conversation sooner rather than later. Consider just some of the ways payroll could help to operationalize your compliance program:

  • Audit. Have either internal or external auditors conducted an annual audit of the payroll accuracy to see if there are any red flags present?
  • Change authorizations. Only if an employee submits a written and signed request for the company to change to an employee’s marital status, withholding allowances, or deductions and there is an appropriate level of review, documentation and approval.
  • Change tracking log. If you are processing payroll in-house with a computerized payroll module, have a secure change tracking and one that captures who made the change request and approval.
  • Expense trend lines. Look for changes in payroll-related expenses in the financial statements and then investigate if any red flags appear.
  • Issue payment report to supervisors. Request that front line supervisors review payroll summaries for correct payment amounts and to spot any unfamiliar names.
  • Restrict access to records. Prevent unauthorized access to payroll records.
  • Segregation of duties. You should never allow one person prepare the payroll, authorize it and create payments.

This payroll example is not just good compliance; it is good business. If a company does not have some of the above controls in place, it is certainly open to becoming the victim of employee fraud. It can also become a defendant in a Foreign Corrupt Practices Act (FCPA) enforcement action if the compliance function does not have visibility into these areas. Once again consider the lowest of the low hanging fruit; gifts, travel and entertainment (GTE).

GTE is the most basic data base in every company yet one which not every compliance function has visibility into because the data is often siloed in systems not available to the compliance department. This is something that if the compliance function could access it could engage in a wide variety of analysis; including such reviews as FCPA, conflict of interest and duplicate payments. There certainly are technological solutions to this compliance issue and they have the added benefit of cutting across siloed corporate financial data.

Just as the Yes classic Roundabout was the result of collaboration, any best practices compliance program should be truly a corporate effort, starting at the top all the way through an organization. With the Evaluation, the DOJ now expects that effort and expects that such effort be documented.

To listen to YouTube clip of Roundabout click here.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Thomas Fox, Compliance Evangelist | Attorney Advertising

Written by:

Thomas Fox

Compliance Evangelist on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.