Chief compliance officers are politicians and have to possess great interpersonal skills. They have to “get along” and persuade key constituencies — most especially their business partners – to commit and devote time and resources to ethics and compliance.

In order to operationalize their programs, CCOs have to build relationships with important partners – human resources, legal, internal audit, procurement, and finance. Up to this date, CCOs have done well with all of these partners, except for one glaring omission – the Chief Financial Officer.

The historical background provides some explanation – CFOs and financial reporting became the focus of corporate governance in the aftermath of Sarbanes-Oxley. CFOs and Internal Audit were elevated in the corporate governance world. To remedy the financial reporting scandals, CFOs were charged with important tasks – improvement of financial reporting processes and design and implementation of internal controls. To reinforce the importance of financial reporting controls, CEOs and CFOs are required to certify to the integrity of their company’s financial reports.

CFOs and Internal Auditors were elevated by direction of federal law – a very specific direction to improve the accuracy of financial reports, and implement internal controls. CCOs have been elevated for a variety of reasons – government enforcement actions and increased focus on corporate culture as a sustainable and valuable asset.

Over the last twenty years, CFOs have exercised their power over the internal controls, under the purview of external auditors. CFOs and Internal Auditors are regularly provided with resources upon demand, with the support and authority of the board of director’s audit committee. CFOs and Internal Auditors manager and oversee the internal controls and any and all “material” transactions.

CCOs have an important responsibility as well – to implement an effective ethics and compliance program in order to promote an ethical culture, and ultimately ensure the company’s sustainable growth and profitability. As part of their mission, CCOs play an increasingly important role in designing compliance controls and enforcing all of the internal controls. CCOs depend on the company’s internal controls and have to be involved in the design and implementation of the company’s internal controls.

CFOs, however, have not put out a welcome mat for CCOs. Instead, CFOs have hidden behind the financial reporting and controls to prevent CCOs from collaborating in this important area.

Given the risk of internal controls violations, there is a need to carefully craft a company’s internal controls. The specific drafting of internal controls creates internal statutes that the government can enforce – in criminal and civil enforcement proceedings. CFOs have to bring in legal, compliance and other key parties when crafting internal controls to ensure that all risks are addressed and evaluated.

The transformation in the CFO and Internal Audit functions has to occur and company’s internal controls need to reflect the input of all key constituencies – and most importantly, the CCO. CFOs have a well-established fiefdom, and they need to release the reins and bring greater collaboration. CCOs need to commit to this important task – collaborating in the design of compliance and accounting internal controls.