by Steve Priest, President of Ethical Leadership Group (a Global Compliance Company)

In his keynote address to the Ethics and Compliance Officer Association in September 2008, Lynn Turner constructed his own “Seven Steps” to an effective ethics and compliance program. Lynn is worth listening to because he’s not an ethics and compliance “insider,” nor is he an attorney. In these times of financial turmoil, many in Washington and Wall Street pay attention to what he has to say.

One would think his accounting expertise might lead to seven steps quite different from the hallowed US Sentencing Guidelines elements. Yet most of his seven steps are unsurprising—indeed quite traditional.

1. Leadership matters. Watch what people do, not what they say.
2. The Code of Conduct should be high quality, including compliance, enforcement, and accountability for those who observe wrongdoing to do something about it. It should also be certified annually.
3. Establish accountability by having real enforcement and sufficient punishment for wrongdoers.
4. Train everybody—including the Board of Directors and senior leadership.
5. Ensure the whistleblower program has sufficient independence.
6. Engage the Board of Directors in the program.
7. Make sure the program includes incentives and compensation in its work—it should help employees avoid temptation.

On their face, most of Lynn Turner’s seven steps are non-controversial. They echo the Guidelines elements. One, however, is interpreted in a way that departs from many in the ethics and compliance field. I’ll discuss this step—whistleblower program independence—in a blog later this week.

About Lynn Turner
He was the chief accountant at the SEC, serves on the Standards Advisory Group of the Public Companies Accounting Oversight Board (PCAOB), a member of the FASB Investor Technical Advisory Committee, and on the Treasury Committee on the Auditing Profession. He also serves on the board and audit committee of the Colorado Public Employees Retirement Association.