Corporate Compliance at Riordan Manufacturing

Corporate Compliance at Riordan Manufacturing
UOP LAW/521
May 25, 2010
Corporate Compliance at Riordan Manufacturing
GovernanceCorporate governance is the set of control and direction under which a Corporation operates through processes, customs, policies, laws, and institutions affecting the way a corporation (or company) is directed, administered, or controlled. Corporate governance principles include: examination of compensation paid to executives, accounting internal controls, verifying accuracy of financial statements, and control over management risk.
Riordan Manufacturing will elect a board of directors to protect the interests of the companys shareholders. To be in compliance with Sarbanes-Oxley, the board of directors will consist of a majority of independent members (Jennings, p. 862, 2006). The most important function of corporate governance is to ensure financial statements comply with statutory and ethical rules. The board of directors will verify accountants and auditors are honest and competent.
The Enterprise Risk Management (ERM) is “a process, effected by an entitys 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 manage those risks to be within its risk tolerance appetite, to provide reasonable assurance regarding the achievement of entity objectives” (BusinessDictionary, n.p., 2010). The management of risk involves mitigating negative risk at the same time taking advantage of positive risk. Riordan??™s board of directors are responsible for establishing an enterprise risk management philosophy that would enable management to effectively deal with uncertainty when implementing an enterprise risk management plan for the company. Corporate Compliance at Riordan Manufacturing
Riordan Manufacturing is a global plastics manufacturer. Doctor Riordan started Riordan Plastics, Inc. in 1991 and the name changed to Riordan Manufacturing, Incorporation in 1993. The company is headquartered in San Jose, California and has plants in Albany, Georgia, Pontiac, Michigan, and a new facility in Hangzhou, China. The company products include plastic beverage containers produced, custom plastic parts are produced, and plastic fan parts are produced. Riordans major customers are automotive parts manufacturers, aircraft manufacturers, the Department of Defense, beverage makers, and bottlers, and appliance manufacturers (Virtual Organization, n.p., 2006).
Riordan Corporate Compliance Plan will include an Alternative Dispute Resolution (ADR) clause to contracts to resolve disputes involving product liability claims, and risks against defective product claims, international laws regarding the plant in China, tangible and intellectual property laws, laws regarding the corporate form of business and protection to the interests of public and private investors through a Corporate Governance Plan.
Organizations Value
Riordan Manufacturing is the industry leader in using polymer materials to provide solutions to its customers??™ challenges. Riordan values are built on the principles of fair dealings and ethical conduct of its employees. The company reputation for integrity and excellence requires the highest standards of conduct and personal integrity of directors, officers and employees to conduct business in accordance with the letter, spirit and intent of all relevant laws and to refrain from any illegal, dishonest, or unethical conduct. ???Our continued success is dependent upon our customers trust, and we are dedicated to preserving that trust??? (Virtual Organization, n.p., 2006).Corporate Compliance at Riordan Manufacturing
Corporate Compliance Officer
Riordan Manufacturing has designated a Corporate Compliance Officer (CCO). The Corporate Compliance Officer will report to the president and CEO of Riordan, and to the board of directors in certain situations. The Corporate Compliance Officer will be responsible for overseeing the Corporate Compliance Plan and will have the following responsibilities:
1. Reviewing and recommending changes to agency policies, and procedures.
2. Ensure that Riordan are in compliance with the letter, spirit, and intent of all relevant laws.
3. Overseeing the administration of agency risk assessment compared to Compliance issues and recommends changes as a result of Risk Assessments performed.
4. Develop and implement internal audit procedures relative to Riordan Corporate Compliance issues.
5. Maintain a library of regulations, policies, and procedures.
6. Overseeing staff, investigate matters related to Corporate Compliance issues, including employees, or consumers.
7. Develop, and implement an employee feedback loop, which encourages employees to report potential problems without fear of retaliation.
8. Make recommendations to the president and CEO for disciplinary action for Code violations.
Written Policies and Procedures
Riordan Employee Personnel Handbook and policy and Procedures manuals for each program cover detailed procedures in which employees are expected to follow. In addition, a Business Code of Ethics and Code of Conduct have been written that detail expected behaviors of directors, officers, and
Corporate Compliance at Riordan Manufacturing
employees. The Employee Handbook will be given to all employees and each employee will sign an acknowledgement of receipt confirming he or she read and understood the policies contained in the handbook.
A fiscal Policy and Procedure will be developed for the Finance and Accounting Department, which will detail a variety of fiscal functions related to fiscal intermediary services. These various Policy and Procedures Manuals will be reviewed at least every other year.
Riordan fiscal intermediary programs consist of three operating entities in Georgia, Michigan, and California that have their own finance and accounting systems with different software applications that run on different operating systems. The challenge with the systems is a compatibility issue that was not addressed when Riordan acquired the operating entities in Michigan and Georgia, and as a result it is difficult to consolidate the information for the financial statements without re-entering the financial data.
Alternative Dispute Resolution (ADR)
Alternative dispute resolution (ADR) offers parties alternative means of resolving their differences rather than pursuing formal litigation and the costly aspects of a lengthily trial. ???ADR ranges from very informal options, such as a negotiated settlement between the CEOs of companies, to the formal, written processes of the American Arbitration Association??? (Jennings, p. 111, 2006). The two major disadvantages of solving problems through litigation is cost, and it can take years before a decision is reached. The most popular ADR method is arbitration, and other methods include mediation, mediation arbitration, mini-trial, rent-a-judge, summary jury trials, early neutral evaluation, and peer review. Riordan will include mandatory arbitration clause in its contract that would ???require, in the event of a dispute, that the parties submit to arbitration??™ (Jennings, p. 111, 2006). Contracts with Riordan
Corporate Compliance at Riordan Manufacturing
customers would also offer a voluntary arbitration clause to resolve goods and services issues, and to handle disputes brought on by the company.
Riordan??™s Alternative Dispute Resolution clause for employees is as follows, Any director, officer, or employee who violates the Corporate Compliance Plan shall be subject to disciplinary measures to correct the problem, and prevent recurrence. Disciplinary measures will include verbal warning, written warning, and suspension with, or without pay or termination of employment. The action taken will depend on the severity of the violation. By enforcing an Alternative Resolution Dispute (ADR) departments can function in a more productive manner.
Enterprise and product liability
Because Riordan Manufacturing is wholly owned by Riordan Industries, the corporate compliance plan must address the Enterprise Liability that exists between the two entities. The Enterprise Liability extends the liability of Riordan Manufacturing to Riordan Industries. This doctrine is mostly concerned with criminal law so this portion of the corporate compliance plan will focus on criminal law.
To limit the liability to Riordan Industries a panel of managers between the two companies will be designated to evaluate the risks of Riordan Manufacturing committing criminal acts. The panel will evaluate each step of the manufacturing process to ensure that compliance to laws, regulations, and company policies, and procedures are followed. The panel will also evaluate subcontractor??™s contracts and work performed by subcontractors, possible risks, and any past criminal infractions by contractors. The panel will provide a report each month to Riordan??™s board of directors regarding their activities and findings.
Corporate Compliance at Riordan Manufacturing
Riordan Manufacturing produces plastic bottles that are used by many consumers. These products could cause harm to consumers. Under section 402A of the Restatement of Torts,
Riordan Manufacturing would be liable for damages to the consumer. The compliance plan will provide best practices and possible ways to limit product liability. Riordan Manufacturing will have an in-house product test department that will test each new product under different conditions for both normal, and misuse of the product. For each problem identified in the test the department will provide an action plan to resolve the problem. Riordan will also contract with an independent outside test laboratory for evaluation of all new products before they are shipped to market.
International Law In 2002 Riordan opened its operation in China. The expansion overseas exposes the company to new laws, policies, and procedures that must be followed. The laws in China can be quite different from the United States, and Riordan will obtain local legal counsel for advice on the peculiarities of the country laws. Riordan also needs to ensure that the employees who are communicating with China have a good understanding of the customs, and cultures practiced in China. For employees visiting China for business, Riordan will provide them with cultural awareness classes that will educate them on the dos and don??™ts in China. Repeated reminders of the practices in China will ensure that employees are not offending the employees of that entity and will ensure smooth business transactions.
Tangible and Intellectual PropertyTangible property is defined as ???the type of property we can see and touch. Delivery trucks, desks, computers, inventory, and the building and land in which a business is located are all forms of tangible Corporate Compliance at Riordan Manufacturing
property??? (Jennings, p. 619, 2006). Riordan Manufacturing physical assets include equipment, inventory, and buildings. The physical assets will be safeguarded and protected. ???In order to ensure consistency of operations and quality control at all Riordan plants, a common set of procedures has been developed for the management of receiving raw materials, tracking products during manufacturing, and accounting for the finished good inventories??? (Virtual Organization, n.d., 2009).
To ensure protection of new products and processes Riordan Manufacturing will file for utility or functional patents and design patents on company equipment, and inventions. The bottles, fans, automotive parts and other products produced by Riordan are examples of the items that will be patented. The designs for these products will also be placed in a secured vault to prevent the possibility of duplication of the products by another company. Employees involved in the designing, and manufacturing of these products will be required to sign disclosure agreement documents to ensure they will not release this information to other companies.
Intellectual property is defined as ???creations of the mind: inventions, literary and artistic works, and symbols, names, images, and designs used in commerce??? (WIPO, n.d.). Riordan??™s intellectual property includes trademarks, trade secrets, patents, software, and copyrights. All patents and trademarks will be examined quarterly to ensure that they are current and up to date. Without protection of intellectual property businesses would not obtain the full benefits of their ideas, and inventions, and would focus less on research, and development. Piracy, counterfeiting, and the theft of intellectual property assets pose a serious threat to all businesses. To help protect the tangible, and intellectual property of the company, executives must: file for protection under United States patent, trademark and copyright laws, Use nondisclosure agreements, Invest in legal counsel, do research against product to Corporate Compliance at Riordan Manufacturing
make sure patent laws are not violated, and the works of others are respected (ALLBusiness, 1999- 2010).
Legal Forms of Business
Riordan Manufacturing is a corporation with ???unlimited duration, free transferability of interest, limited liability for shareholders/owners, continuity, and centralized management??? (Jennings, p. 855, 2006). Riordan will comply with the Model Business Corporation Act (MBCA) and comply with all state and federals laws and regulations, and with Sarbanes-Oxley Act of 2002. Riordan will be governed by the board of directors, officers, and executive committees. A summary of the corporate policies, procedures and rules will be included in the employee handbook. Riordan will file all necessary financial statements on a timely basis. The officers and directors will verify the accuracy of the financial statements and external auditors will verify compliance with the Sarbanes-Oxley Act. Conclusion
Riordan Manufacturing Corporate Compliance Plan was created to ensure Riordan comply with applicable laws and regulations. The Corporate Compliance Plan stresses the importance of internal controls to minimize corporate risks by applying recommendations of the Committee of Sponsoring Organization of the Treadway Commission (COSO). Riordan will establish internal controls to identify, prevent, limit, and correct violations. A benefit of having a compliance program in place in an organization it may receive a substantially reduced fine, and maybe able to avoid corporate probation and criminal prosecution.
References
AllBusiness, (1999 – 2010). ALLBusiness. Retrieved from
http://www.allbusiness.com/legal/intellectual-property/11140-1.html
BusinessDictionary.com. (2010). Enterprise risk management. Retrieved May 25, 2010, from http://www.businessdictionary.com/definition/enterprise-risk-management-ERM.htmlMarianne Moody Jennings (Ed.). (2006). Business: Its Legal, Ethical, and Global Environment. [University of Phoenix Custom Edition e-Text]. : . Retrieved May 25, 2010, from LAW/521.Virtual Organization: Riordan Manufacturing. (2006). Retrieved May 25, 2010, from University of Phoenix, Law/531 https://ecampus.phoenix.edu/secure/aapd/cist/VOP/Business/Riordan/Internet/IndexPort.htm
WIPO, Encouraging Creativity and Innovationt. Retrieved from http://www.wipo.int/about-ip/en/

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