Generally speaking, the FCPA’s internal controls provisions require issuers to “devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances” that certain limited financial objectives are met. The FCPA then defines “reasonable assurances” to mean “such level of detail and degree of assurance as would satisfy prudent officials in the conduct of their own affairs.”

The main problem with these provisions is there is no specific standards by which to judge compliance. Indeed, as highlighted in this prior post, in SEC v. Worldwide Coin (believed to be the only judicial decision to substantively construe the FCPA’s books and records and internal controls provisions) the judge stated:  “The main problem with the internal accounting controls provision of the FCPA is that there are no specific standards by which to evaluate the sufficiency of controls; any evaluation is inevitably a highly subjective process in which knowledgable individuals can arrive at totally different conclusions.”

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