We all know that a proactive Securities Exchange Commission, combined with implementation of the Sarbanes-Oxley Act of 2002 and activation of the Public Company Auditor Oversight Board, has triggered intense scrutiny on corporate ethics and accountability. One by-product of this is that the public company has come to serve as a mentor of sorts to the private company in the arena of corporate compliance programs, offering certain “best practices” that may also be useful to the privately held company, its management and its shareholders or owners.

A compliance program establishes an environment that generates certain positive results, such as protection of owners’ capital or shareholders’ equity, creation of a positive work environment where high standards of ethics are the standard and encouragement of customer or client confidence where strong control functions indicate the importance of quality, accountability and accuracy. It also establishes an infrastructure of proactively created controls, resulting in business judgment and good faith defenses in the event of unforeseen issues and problems.

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