The responsibility for almost every act of corporate malfeasance can be laid at the doorstep of the corporate board.  Yet, directors complain about being overwhelmed by their responsibilities and their obligations to supervise and monitor.

 This is especially true when it comes to compliance.  Congress has pushed corporate boards to do more and to take more responsibility.  Sarbanes-Oxley led to a radical transformation of board responsibilities.  Congress was willing to micro-manage the Board’s responsibilities and activities, and even added a new crime for certifications of false auditing reports. 

Congress’ actions almost ten years ago set a precedent.  Dodd-Frank was a mere follow-on to Sarbanes-Oxley with a different focus – this time it was corporate compensation.  The American public was disgusted by the huge compensation packages handed out to corporate leaders while the economy suffered a terrible meltdown.

Corporations have a delicate relationship with Congress.  When things turn sour, Congress turns its attention to corporate actions. 

Compliance is going to become the new catch word for Congress and corporations.  Congress is becoming more interested in corporate scandals which result from lack of corporate compliance.  All of the elements are there for a new legislative push in this area.  Congress does not have a positive view of corporate compliance, especially in the anti-corruption area.  Congress will come up with “new” ideas on how to fix such problems.

Congress will turn to two primary areas and mandate corporate structural reforms.  These include:

1.  Prohibiting companies from having one person serve as Chairman of the Board and Chief Executive Officer of the company.  Congress is becoming more and more concerned with conflicts of interest.  At the core of many Dodd-Frank provisions is a common principle – eliminating conflicting interests.  A basic proposal for improving corporate governance is to prohibit dual leadership of the company and the board by one individual. Separating these two positions between two individuals will be seen as a logical step for Congress to mandate.

 2.  Imposing structural changes on companies and chief compliance officers.  Congress is looking at the role of Chief Compliance Officers and their place in corporate organizations.  Congress will eventually mandate basic requirements for CCOs which will include:

 3.  Requiring CCOs to report directly to the Audit or Compliance Committee

4.  Requiring CCOs to report to the Audit Committee twice a year.

5.  Elevating CCOs within a company to the same management level as other “C-level” executives.

 In the end, Congress wants to hold someone responsible for corporate malfeasance and wants to make sure that someone is committed to proactive steps to ensure compliance.  The Board will be awarded this responsibility and will be held accountable.

In the end, the Audit or Compliance Committee may be more active than anyone can imagine.  It will require a rethinking of corporate governance principles.  Most importantly, such “reforms” will transform the Audit or Compliance Committees by requiring that members have the requisite expertise to supervise and monitor corporate compliance.

Those companies that embrace these “reforms” now will be way ahead of the game.  The principles outlined above are important and can have a lasting impact on a company’s overall performance.  Corporate leaders need to design and implement such a vision.