Please feel free to contact me anytime to share your thoughts: +1 612.357.1544 (cell), +1 952.567.6215 (direct), gerry.zack@corporatecompliance.org.
Until recently, I had no idea how explosive the word “independent” could be. In talking with some internal auditors about independence, I was informed that only internal audit can be independent—that compliance inherently cannot be independent. Rather than debating the form-over-substance aspect of what we were discussing, we moved on to reporting relationships and what independence really means. Independence from whom or what?
Independence is formally defined in professional standards for external and internal auditors, and perhaps that’s part of the problem. The word is so closely associated with auditing that using it in any other context triggers a reaction, even if the definition in the standards could easily be applied elsewhere. Internal auditors have standards from The Institute of Internal Auditors that define independence as “the freedom from conditions that threaten the ability [for the audit function] to carry out [its] responsibilities in an unbiased manner,” requiring that the head of internal audit have “unrestricted access to senior management and the board [of directors].”[1]
That definition, or something very close to it, seems like it could also apply to the compliance function. But should it? Compliance professionals sometimes use the word “independent” in reference to being separate from the legal or general counsel’s office. In other cases, it is used more broadly.
The U.S. Department of Justice uses the expression “sufficient autonomy”[2] rather than “independence,” and that seems to be much more acceptable. It’s a very reasonable way of expressing the ideal relationship that compliance should have with others in an organization. On the one hand, compliance is part of the organizational structure, and the chief compliance officer may be considered to be part of senior management. Yet it also suggests a degree of control.
Interestingly, “independent” is defined as not being subject to the control of others or as self-governing.[3] If you look up the definition of “autonomy,” it is “the quality or state of being self-governing.”[4] So there you have it. Two terms that are used differently but that are defined identically. Sometimes it’s all about selecting our words very carefully depending on whom we are talking to.