Compliance and Ethics at UCF Rhonda L. Bishop Chief Compliance and Ethics Officer LIFE @ UCF January 22, 2013 Agenda Overview of Compliance, Ethics, and Risk Office Mission and Purpose What is Compliance? What is Ethics? What is Enterprise Risk Management? Cases in Higher Education How to Respond Ethical Leadership Overview of Office Started in May 2011 Report to university president, administratively to chief of staff, and to the Board of Trustees Responsible for the development of a compliance, ethics, and enterprise risk management program Oversight responsibility Assigned responsibility for the athletics compliance program in November 2011 Mission: The University Compliance, Ethics, and Risk Office provides oversight and guidance to university-wide ethics, compliance, and enterprise risk management activities, and fosters a culture that embeds these disciplines in all university functions and activities. Purpose: As a newly established office and program, our office provides centralized and coordinated oversight of the university’s ethics, compliance, and risk mitigation efforts through the ongoing development of effective policies and procedures, education and training, monitoring, communication, risk assessment, and response to reported issues. Requirements for Higher Education Chapter 8 of the U.S. Federal Sentencing Guidelines • Contains seven elements for an effective program • Defines the responsibility of the board, president, senior leadership, and the compliance and ethics officer Elements of an Effective Program 1. 2. 3. 4. 5. 6. 7. Oversight Standards and Procedures Education and Training Monitoring and Auditing Reporting Incentives and Disciplinary Measures Response and Prevention • Risk Assessment • Effectiveness Assessment 8. “Promote an organizational culture that encourages ethical conduct and a commitment to compliance with laws.” Responsibility Board President and Senior Leadership Chief Compliance and Ethics Officer Employees What is Compliance? The process of meeting: The expectations of external stakeholders who grant us money, pay for our services and regulate our industry The internal expectations of our organization What is Ethics? Merriam-Webster Dictionary 1. Discipline dealing with what is good and bad, with moral duty and obligation 2. Set or system of moral values and principles 3. A guiding Philosophy 9 What is E.R.M.? “A process, affected by an entity’s board of directors, management and other personnel, applied in strategy setting and across the enterprise, designed to identify potential events that may affect the entity, and to manage risks to be within its risk appetite, to provide reasonable assurance regarding the achievement of entity objectives.” COSO – Committee of Sponsoring Organizations of the Treadway Commission Governance, Risk Management, and Compliance (GRC) Governance – establishes objectives and high level boundaries Risk Management – identifies and addresses potential obstacles Compliance – ensures boundaries are well set and identified and that business is conducted within those boundaries Ethics – builds a strong culture and provides a safety net in the absence of controls C.E.M. Fraud Conflicts of Interests Conflict of Commitment Scientific Misconduct “Tough situations don’t build character… tough situations reveal character!” 2008 Degree Scandal First Identification of Student Name by the Media 13 Virginia Commonwealth University Failure to obtain 30 credit hours in residence No exception to that requirement was requested or approved Student afforded preferential treatment throughout the degree granting process More than one employee overlooked or disregarded institutional policies and procedures President’s name invoked in allegations VCU Findings Investigation of over 15,000 degrees demonstrated only two degrees did not meet residency requirement VCU met all SACS requirements for policies and procedures Investigation found no systemic failures Identified opportunities to strengthen process Two university deans resigned and a faculty member provided with a letter of counsel and caution VCU Corrective Actions Revised degree revocation policy Strengthened language on graduation application form Communication of student’s responsibilities to understand and satisfy graduation requirements Developed transfer and advising manual Developed degree audit function and registrar audit Code of Ethics, Creed and Code of Conduct training Compliance and Audit added annual reviews to work plan West Virginia University Awarded a retroactive degree to a former executive MBA student due to uncertainty surrounding the student’s records Records later proved to include the falsification of grades Provost and dean of the business school resigned Later in June of 2009 the president resigned Carnegie Mellon University Error in judgment involving the approval of excessive transfer credits and excessive units for independent study in lieu of course work for a student who received a master’s degree Dean of the Heinz School of Public Policy and Management resigned Penn State Sex Abuse Scandal Sexual assault by Jerry Sandusky, former assistant football coach, of at least eight underage boys from 1994 to 2009 Abuse occurred on or near university property Allegations that senior school officials were aware and failed to respond Grand jury investigation June 22, 2012 Sandusky found guilty on 45 counts of sexual abuse Sentenced to 30 years minimum and 60 years maximum Penn State - C.E.M. Gary Schultz, senior vice president and Tim Curley, athletics director charged with perjury and failure to report child abuse President Graham Spanier forced to resign Joe Paterno, head football coach fired Tim Curley, athletics director fired Steve Garban, stepped down as chair of the PSU board of trustees, later resigned after Freeh report Nov. 1, 2012, Spanier, Curley, and Schultz charged with grand jury perjury, conspiracy, obstruction of justice, and child endangerment Freeh Report Independent review by Louis Freeh and his law firm Stated that Spanier, Paterno, Curley, and Schultz had known about the allegations of child abuse as early as 1998 and were “complicit in failing to disclose them” Recommendation for the development of an institutional compliance and ethics program Athletics compliance should report to Chief Compliance and Ethics Officer Additional Penalties Fined $60 million by NCAA Sanctions by NCAA including 5 year probation Fined $13 million by Big Ten conference Federal criminal probe by local U.S. attorney Investigation by the U.S. Dept. of Education for failure to comply with the Clery Act Civil Suits Cost of Non-compliance Johns Hopkins University 2.6 million University of Alabama at Birmingham $3.4 million Mayo Foundation $6.5 M University of Minnesota $32 M University of South Florida $4 M Florida International University $27 M Penn State $73 M and counting… Double Dipping Couple Researchers recruited by University of Minnesota Under contract by Georgia Tech while working at Minnesota Led to grand jury indictments and conviction in Georgia Restitution to Georgia Tech January 2013 forced to resign from University of Minnesota Cheating Statistics College Students: High School Students: 20% reported cheating in 1940 49% reported cheating in 1993 75% to 98% 2003 to 2011 Engineering and business majors more likely to cheat Cheating declined in 2012 for the first time 51% reported cheating in 2012 59% reported cheating in 2010 Cheating begins in middle school Source: Josephson Institute for Ethics What Drives Ethical Failures? Pressure to succeed Competing incentives Different values Focus on short term Belief they will not be caught Minimize the wrong doing 2011 National Business Ethics Survey 45% of employees witnessed misconduct at work (49% in 2009 and record high of 55% in 2007) 65% reported the bad behavior they saw (63% in 2009; record low 53 % in 2005) 22% who reported misconduct say they experienced some form of retaliation in return (12% in 2007 and 15% in 2009) 13% of employees perceived pressure to compromise standards in order to do their jobs (shy of the all-time high of 14 percent in 2000 The share of companies with weak ethics cultures also climbed to near record levels at 42%, up from 35% two years ago. Source: ETHICS RESOURCE CENTER How to Respond 1982 Tylenol Case Remediation and rectification Be prepared – risk assessments Put together a team Be accountable Be transparent and communicate first Take quick corrective actions Develop long term solutions Elements of an Effective Program 1. 2. 3. 4. 5. 6. 7. Oversight Standards and Procedures Education and Training Monitoring and Auditing Reporting Incentives and Disciplinary Measures Response and Prevention • Risk Assessment • Effectiveness Assessment 8. “Promote an organizational culture that encourages ethical conduct and a commitment to compliance with laws.” “Integrity, scholarship, community, creativity, and excellence are the core values that guide our conduct, performance, and decisions.” The UCF Creed UCF Values Values serve as a moral compass Guides us through complex dilemmas about right and wrong Litmus Test Other Sources of Guidance: Policies and Procedures Ethics and Compliance work together Communicates expectations Boils down volumes of Federal and State Laws Protects employees and the University from the risk of non-compliance Policies and procedures are the floor Building an Ethical Culture There are only two ways: 1. Hire 2. Promote …employees with integrity and parallel values What makes an ethical leader? Slightly more than one in ten Americans believes their company’s leaders are ethical and honest (Maritz Research) Seven Habits of an Ethical Leader 1. strong personal character 2. a passion for doing right 3. a proactive behavior 4. keeping the stakeholders’ interests in mind 5. a recognition of their value as role models 6. an awareness that decision making should be transparent 7. a holistic view of human beings “I” Project Competition ICAC Winners – Azul, Kiran, Nidhi, Yifan Ethical Leadership Lead by example – one person can make a difference Educate yourself - be aware and understand our policies and procedures Use ethics in your decision making Exhibit selflessness Don’t be afraid to ask for help or raise concerns Speak up No One Said it Would Be Easy Doing the right thing is not always easy Competing Incentives Lead for long term results not short term successes Must be visibly ethical and consistent Rhonda’s 4 Rs Respect Responsibility Reconcile Remember Quotes “Good people do not need laws to tell them to act responsibly, while bad people will find a way around the laws” Plato ~ 400 BC “Always do right, this will gratify some and astonish the rest.” Mark Twain “That you may retain your self respect, it is better to displease the people by doing what you know is right than to temporarily please them by doing what you know is wrong.” William J. H. Boetcker 39 Thank You Contact Information: Rhonda L. Bishop University Compliance and Ethics Office Millican Hall, Rm 350 Rhonda.Bishop@ucf.edu 823-6263