Internal Controls Provision The payment of bribes often occurs in companies that apter < have weak internal control environments. Internal controls The FCPA: over financial reporting are the processes used by compa- | SSTEUINAING) [NCS ON nies to provide reasonable assurances regarding the reliabil- ity of financial reporting and the preparation of financial statements. They include various components, such as: a An effective compliance program is a critical com- control environment that covers the tone set by the organi- ponent of an issuer’s internal controls. Fundamentally, zation regarding integrity and ethics; risk assessments; con- the design of a company’s internal controls must take into trol activities that cover policies and procedures designed account the operational realities and risks attendant to the to ensure that management directives are carried out (c.g., company’s business, such as: the nature of its products or approvals, authorizations, reconciliations, and segregation services; how the products or services get to market; the of duties); information and communication; and monitor- nature of its work force; the degree of regulation; the extent ing. Section 13(b)(2)(B) of the Exchange Act (15 US.C. of its government interaction; and the degree to which it § 78m(b)(2)(B)), commonly called the “internal controls” has operations in countries with a high risk of corruption. A provision, requires issuers to: company’s compliance program should be tailored to these differences. Businesses whose operations expose them to a devise aiid Tania & Gystatt at hntenmal axemumTeing high risk of corruption will necessarily devise and employ controls sufficient to provide reasonable assurances that— different internal controls than businesses that have a lesser (i) transactions are executed in accordance with man- exposure to corruption, just as a financial services company agement general er specie autherizarion would be expected to devise and employ different in