A Governing Body or Board of Directors is the highest group of people who hold the authority to exercise governance over an organization. This governance includes formulating policy, directing affairs, or making decisions. In this discussion, “governing body” and “board of directors”, and “board” is understood to mean the same thing.
Because the board is the highest authority within an organization, compliance is a fundamental part of the boards function. While there may be slight variations in board composition, structure, and activity based on organizational needs and state or federal law, the main role of the board is to protect the organization and persons who have an interest in it, such as shareholders or owners.
Whether an individual or a collective group, the board is responsible for the oversight of the company. Common areas of oversight include strategic planning, financial oversight, and risk management and compliance.
Each individual board member has three fundamental duties they are held to, and these duties illustrate how and why a company’s compliance culture is driven from the top.
- Under the duty of obligation, the board members have a legal obligation to ensure the organization complies with all laws and regulations governing it. This duty plants the responsibility for compliance directly with the board of directors.
- Under the duty of care, a board member has a legal responsibility to actively participate in decision making for the company by using good judgment. Within this duty of care is the concept of reasonable inquiry which requires the board member to ask questions regarding operations in order to make decisions. This requirement also places the responsibility for compliance directly with the board.
- Under the duty of loyalty, the individual board member must put the organizations needs before their personal interests while making decision. A compliance programs conflict of interest policy flows directly from this requirement.
In addition to the board member’s liability regarding the oversight of the organization, there are also regulatory requirements for board involvement and oversight. The Centers for Medicare and Medicaid (CMS) requires home health agency governing bodies to ensure ongoing quality improvement and patient safety, and that fraud and waste are addressed (CMS, 2020). The conditions of participation also requires that the governing body approve the frequency and detail of the data collected by the agency for use in quality improvement (CMS, 2020). This requirement dictates that the board participate at a granular level of engagement in the agencies monitoring of data by approving which data to monitor. This ensures the board is actively participating in the oversight of compliance.
Additionally, the Federal Sentencing Guidelines (FSG) place the oversight of compliance with the board of directors as the body responsible for oversight. The FSG requires the organization to exercise due diligence in preventing and detecting fraud and criminal conduct by implementing a compliance program. Within the FSG guidance is the requirement that the organization have a compliance officer or high level official to implement the program. This compliance officer position has authority to implement the program with direct access to the board. This direct line of authority places the responsibility for compliance oversight with the board.
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Centers for Medicare and Medicaid (2020) State Operations Manual: Appendix B -Guidance for Surveyors Home Health Agencies. Retrieved April 10, 2020 from https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/som107ap_b_hha.pdf