Monday, January 27, 2014

Annual Ethics Training

Government contractors with a contract greater than $5 million and lasting more than four months are required to have a Business Ethics and Compliance program. One of the key features of most, if not all ethics programs is a need and requirement to provide periodic ethics training to employees. This is a reminder to those companies that have allowed their training efforts to languish to dust it off and get back on the program.

We've seen many cases over the years where contractors have spent a lot of time, money, and effort to develop robust ethics programs, only to allow the training aspect of their ethics programs to lapse. After a few years, the excitement wears off (right, ethics training is exciting?), the emphasis wains and other priorities take over. What was once a vibrant ethics program becomes just another policy and procedure manual that no one ever reads. If the contractor is lucky, someone within the company will be able to dredge up a copy if an auditor happens to ask for it.

And, invariably, an auditor will come looking for it. Auditors use the information to perform risk assessments. A viable ethics program will allow, in theory, auditors to reduce the amount of transaction testing necessary to formulate an opinion on whatever it is they're auditing. This is good for the contractor and good for the auditor. But woe to the company that has a training program as part of its ethics program but does not fullfull it. Its almost worse to have an ethics program and not follow it to not having one at all. Its a slam-dunk finding for an auditor to report failure to follow existing policies and procedures.

The Department of Defense requires annual ethics training for members of its acquisition workforce. To them, ethical values-based decision making is the foundation for successfully supporting the Department and protecting the taxpayer. Annual training provides awareness of ethical obligations and responsibilities. Training is not going to guarantee that nothing will go awry. Peruse (or subscribe) to the Department of Justice press releases and you'll find some kind of procurement fraud every week, sometimes more frequently. But, the hope is that by providing training, everyone's awareness is raised and contractors can minimize the risk to themselves.

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