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corporate compliance plan for Riordan

Resources: Riordan Organization, and the COSO website (

View the Riordan virtual organization. (see below description)

Create a corporate compliance plan for Riordan.
Focus your plan on managing the legal liability of officers and directors of Riordan.

The plan must also address how to handle situations when laws are violated or in question (such as when to call in legal counsel, what rights the employees have, or who to turn to when actions are taken against Riordan).

Your plan must also include the following:

â?¢ Enterprise liability
â?¢ Real and intellectual property
â?¢ Governance principles of regulatory compliance requirements
â?¢ The specific international laws or aspects of the law that must be adhered to by Riordan and an outline of these steps for employees to adhere to these laws

Format your Corporate Compliance Plan as if you were going to distribute this to the officers and directors of Riordan.

Outline the prevention and management guidelines of the legal aspects listed above.

Implement enterprise risk management based on the COSO's 8 recommendations. COSO can be used to structure your plan. Be sure to incorporate key concepts from your readings where appropriate. You need to research requirements at the COSO website.

""Riordan Manufacturing, Inc. is an industry leader in the field of plastic injection molding. With state-of-the art design capabilities, we create innovative plastic designs that have earned international acclaim. Attention to detail, extreme precision and enthusiastic quality control are the hallmarks of Riordan Manufacturing. With facilities in San Jose, California, Albany, Georgia, Pontiac, Michigan and Hangzhou, China, we have the capacity to fulfill your unique needs. Riordan Manufacturing is wholly owned by Riordan Industries, a Fortune 1000 enterprise.""

Some of our products

â?¢ Plastic Bottles
â?¢ Fans - All sizes
â?¢ Heart Valves
â?¢ Medical Stents
â?¢ Custom Plastic Parts

Solution Preview

Step 1

The legal liability of directors and officers arises because of their duties. They have the duty to exercise due diligence in overseeing the activities of Riordan. The legal requirements are that the directors and officers must act in good faith and in the best interests of the organization. For example if a director of Riordan decides to use money entrusted to him for personal purposes, he will be held liable. Further, he must act in good faith, in the best interests of the organization and must be loyal. In other words he must put the interest of the organization before his own interest. Supposing an officer uses inside information and sells or buys shares on his own account, he will be legally liable. In addition, the directors and officers of Riordan are bound to a duty of obedience and act within the rules and laws of Riordan. If the rules require the directors to attend a particular board meeting the director should attend the meeting.

Step 2

The directors and officers will be liable under a statute if they do not act in accordance with the statute. For example, the Sarbanes-Oxley Act 2002 requires the CEO to endorse the financial statements of the company. If the CEO refuses to endorse the financial statements then the CEO will be liable because of failure to act in accordance to a law. The directors and officers of Riordan can be held liable if the firm, namely Riordan fails to act in accordance with the law. Consider the case, where Riordan fails to submit reports required by the Securities and Exchange Commission.

Step 3

The Riordan directors and officers can be held liable for the violation of law as mentioned earlier. They can be held personally liable. The directors and officers cannot claim that they did not know if they had violated the law.

Continuing with the example of the Sarbanes Oxley Act 2002, if the CFO or the CEO signs the financial statements and there are misstatements in them, the CFO or/and CEO may be held personally liable. The defense that they did not know what was in the financial statements will not be accepted. Similarly, the board member may not get legal protection under board indemnity. Even if a member resigns from the board, that is not enough to avoid liability. If the directors and officers of Riordan have not performed they may have legal liability.

Step 4

The possibility of legal liability both for Riordan and its directors and officers can be reduced greatly if the directors and officers are provided training. They must be alerted to the legal liability associated with being a director of the organization, the obligations of the directors, and their responsibilities. The directors must understand the finances of Riordan and ensure that they understand the direction in which Riordan is moving. They must take actions that will ensure that their personal interest does not conflict with that of organizational duties. The directors and officers of Riordan must handle confidential and sensitive information carefully and in such a way that they prevent unauthorized release of information. The directors and officers must not accept favors, money or gifts related to the duties of the company.

Step 5

Riordan should appoint a Compliance officer. The Compliance officer will have the duty to supervise the legal compliance of Riordan and its ...

Solution Summary

corporate compliance plan for Riordan is discussed in great detail in this solution.