This week I am exploring a five-part series on compliance as seen through the lens of Winnie the Pooh and the characters who live in the Hundred Acre Woods: Pooh, Eeyore, Tigger, Kanga & Roo, and Piglet. Winnie-the-Pooh, also called Pooh Bear and Pooh, was created by English author A. A. Milne. We began by introducing Tigger and the sales function role in compliance, then Kanga and Roo and the role of Human Resources in compliance, yesterday we considered perhaps the most beloved character (other than Pooh himself) Eeyore. Today we discuss Piglet, Winne’s best friend.

Piglet is introduced in A.A. Milne’s first book, Winnie‑the‑Pooh, and also appears in every chapter of The House at Pooh Corner. He is also close to Christopher Robin and the rest of the main characters. He is diminutive being only slightly taller than Roo. His voice is described as “squeaky”. Piglet himself can read and write, at least well enough for short notes.

Piglet has pink skin and a magenta jumper. He often runs and hides when unnecessary and often stutters when nervous. Yet he has a lot of hidden courage and often faces danger to help others, even when afraid. Stories about him tend to revolve around these traits as well as his small size. Piglet loves beautiful things like flowers, is very kindhearted and is obsessed with keeping things neat and tidy. He sometimes has an inferiority complex, although his friends think highly of him. However, he is often left performing tasks better suited to someone bigger and stronger than he is.

Piglet has some great adventures (or sometimes misadventures) such as giving Eeyore a birthday balloon that pops or getting lost in the Hundred Acre Wood mist and helping to rescue Pooh and Owl after they are trapped in Owl’s fallen house. My favorite Piglet tale is when Eeyore mistakenly offers Piglet’s house as a new home for Owl, after his house had blown down. Piglet nobly agrees to let Owl have the house, at which point Pooh asks Piglet to live with him and Piglet accepts. This poignant story shows the true meaning of friendship as well as any Pooh story I know.

I cannot think of any character more able to illustrate the role of finance in compliance than Piglet. As noted, he is obsessed with keeping things neat and tidy and sometimes has an inferiority complex, although his friends think highly of him. Sort of like finance.

Finance has roles in the prevent, detect and remediate prongs of any compliance program. In the prevent prong, this is most particularly true around offshore payments, which are generally defined as payments made to a location other than the home domicile of the payee or the location where the services where delivered. If a Tunisian agent who performs services in Dubai asks for payment in a location other than Dubai or Tunisia, that would qualify as an offshore payment. If you train people who are in finance on this issue, they may well pick up the phone, and notify compliance when they see a request for payment in a geographic location separate and apart from one of the two standard payment venues. Those are the types of communications, when properly documented, that demonstrate your compliance program is operationalized into the fabric of the organization.

In the detect prong, there are several specific internal finance controls that facilitate the detection of an authorized or even illegal payment. These controls help keep an eye on the money trail as the money to pay a bribe is usually hidden in some company expenditure. The four general areas of payroll control should include: 1) segregation of duties; 2) accountability, authorization, and approval; 3) security of assets; and 4) review and reconciliation.

Finally, finance has a role in the remediation prong of any best practices compliance program. If there was a finance control failure which led to or even allowed a compliance violation, what was done to fix the control issue? Here finance should work to perform a root cause analysis of what led to the control failure and then enhance or upgrade the control to provide a solution going forward. Of course, there should be a fully documented audit trail for this work to provide to the government should they ever come knocking or even to your own corporate auditors.

This means that not only can finance be one of the compliance function’s strongest corporate allies; but that the role of finance, by its nature, works to operationalize compliance. This is because to implement the appropriate internal controls around compliance, finance must know the specific requirements of compliance, know what kinds of issues are likely to come up that might create a risk of bribery and corruption, all leading to an understanding of the appropriate compliance internal controls to implement around payments.

Join me tomorrow when I conclude with Winnie the Pooh and his influence on the Chief Ethics and Compliance Officer (CECO) role. (Hint: Think Think Think)

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