Penn State Scandal: Could a Corporate Compliance Model Have Prevented It?
posted by Frank Pasquale
The Penn State scandal has become ever more shocking with each new revelation. My colleague Kathleen Boozang argues that it is time for higher ed to learn from other large enterprises about the importance of compliance:
It appears that even now, Penn State lacks a compliance program, the creation of which Special Investigative Counsel Freeh’s Report recommends. Previously limited to financial fraud and HR issues, a June 21, 2012 posting by Penn State’s internal auditor announces a poster redesign advertising its hotline number, to which any ethical or legal concerns can now be reported. Important will be training throughout the university regarding the law’s protection of whistleblowers, about which, according to Freeh’s Report, top university leaders were unaware.
While it is stunning that, even now, Penn State has not advanced further in setting up these protective measures, it is fair to say that much of higher ed has been slow to adopt compliance best practices common to the healthcare sector and most business entities.
In related news, the Institute of Internal Auditors met in Boston last week. It looks like they will need to play an increasing role in the higher education setting, especially if internal compliance methods are not mere “rituals of verification.”
July 17, 2012 at 3:57 pm
Posted in: Accounting, Corruption, Criminal Law, Education
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Responses (2)
Ken Rhodes - July 18, 2012 at 8:46 am
In my career in computer software, it was a given that implementation of “best practices” had to flow downhill from the top. If the Chief was truly committed to the best practices, then the organization would likely fall in line. If, OTOH, the Chief thought the reason for compliance (with anything, whether it be HR regulations or software QC standards) was to pass muster at the audit, then the folks in the chain of command treated it that way too. Compliance was grudging at best, and often bypassed in the name of “efficiency” or “other priorities.”
From the anecdotal evidence about “what did he know, and when did he know it,” it seems to me that the Penn State mess was one of those situations where the commitment at the highest level was to other objectives, and minimal (if any) “compliance” was viewed as merely a way of avoiding outside interference.
Ray Campbell - July 20, 2012 at 3:31 pm
Penn State did not even have an inhouse counsel at the time the scandal was developing. Given the sheer scope of the Penn State enterprise, that’s astounding.
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