Riordan Compliance Plan Law 531 Final

Corporate Compliance Plan for Riordan Manufacturing University of Phoenix Riordan Manufacturing is a profitable plastics manufacturer with annual earnings of $46 million. The company is wholly owned by Riordan Industries, a Fortune 1000 company with revenues over $1 billion. The following are some of the products produced by Riordan Industries: plastic bottles, fans, heart valves, medial stents, and custom plastic parts (Virtual Organization, 2009). This compliance plan will state the company’s legal responsibilities and regulations necessary to continue earning a profit.

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The plan will address the laws affecting the plastic industry and guidelines to ensure management and employees understand and obey the laws. The focus of the compliance plan will be on managing the legal liabilities of Riordan officers and directors. Riordan Manufacturing was started and founded by Dr. Riordan, a professor of chemistry. The company focused on research and development of plastic substrates. In 1992 the company purchased a fan manufacturing plant in Pontiac, Michigan. In the year 2000, the fan operation was moved to China. The corporate headquarters that include research and development is located in San Jose, California.

Plastic beverage containers are produced in Albany, Georgia and custom plastic parts are produced in Pontiac, Michigan (Virtual Organization, 2009). The compliance plan will include an Alternative Dispute Resolution (ADR) to resolve a dispute, product liability to address 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. Alternative Dispute Resolution (ADR)

The definition of an alternative dispute resolution (ADR) according to the book Business: Its Legal Ethical and Global Environment written by Marianne Moody Jennings is, “Alternative dispute resolution (ADR) offers parties alternative means of resolving their differences outside actual courtroom litigation and the costly aspects of preparation for it. ADRs range from very informal options, such as a negotiated settlement between the CEOs of companies, to the formal, written processes of the American Arbitration Association. These processes may be used along with litigation or in lieu of litigation (Jennings, 2006). There are two major disadvantages of solving problems through litigation, it is very expensive, and it can take years before a decision is reached. The most popular ADR method is arbitration, other methods include mediation, mediation arbitration, mini-trial, rent-a-judge, summary jury trials, early neutral evaluation, and peer review (Jennings, 2006). Riordan’s mission statement states the company will maintain an innovative working environment. Employees will be well informed and properly supported. Furthermore, the company will provide a climate focused on keeping employees long term (Virtual Organization, 2009).

The Peer Review process will be used to resolve disputes between the company and employees. When an employer-employee dispute arises, a panel of three people will resolve the problem. The panel consists of fellow employees, one chosen by management, one chosen by the employee, and one chosen randomly. The panel will interview, review documents, and make the final decision which can include a monetary award of damages. Peer Review is a new process that has beenvery successful. Only 10% of peered reviewed cases proceed to litigation, saving the company time and money (Jennings, 2006).

Riordan’s mission statement states they will provide solutions for their customers and not be part of their customers challenges. Riordan will strive for long-term relationships with customers (Virtual Organizations, 2009). For external disputes the mediation process will be used. Mediation is a process where both parties meet with a neutral person who listens to both sides. The neutral person does not issue a decision, they help the parties find an agreeable solution. According to the National Law Journal, 88% of lawyers prefer mediation as a way of resolving disputes.

Mediation is a popular process to resolve conflicts between businesses (Jennings, 2006). Enterprise and product liability Riordan Industries wholly owns Riordan Manufacturing. Because of enterprise liability, when Riordan Manufacturing does not comply with laws and regulations,both Riordan Manufacturing and Riordan Industries are liable. Riordan Industries must ensure that Riordan Manufacturing does not create corporate liability for itself. Enterprise liability is mainly concerned with criminal acts, thus the compliance plan must address criminal law.

The best way to limit the liability to Riordan Industries is to have a panel of managers between the two companies evaluate the risks of Riordan Manufacturing committing criminal acts. The panel should evaluate each step of the manufacturing process to verify compliance to laws, regulations, and criminal acts. An example of criminal activity would be illegal dumping of hazardous waste. The panel should also evaluate work performed by subcontractor’s. All subcontractors contracts will be evaluated by the panel. Subcontractor’s will be evaluated for possible risks and any past criminal infractions.

Federal law states subcontractors are to be monitored by the prime contractor. Understanding the possible criminal risks of subcontractors is vital to the continued success of Riordan Industries. The panel will provide a report each month to the Board of Directors of Riordan Industries regarding their activities and findings. Riordan Manufacturing produces plastic bottles that are used by many consumers. These products could cause harm or injury to consumers. Under section 402A of the Restatement of Torts, Riordan Manufacturing is liable for damages to the consumer (Jennings, 2006).

The compliance plan will address the possible ways of limiting product liability. Riordan Manufacturing will have an in house product test department. The department will test each new product under different conditions. The tests will include both normal, and misuse of the product. For each problem, or finding, the department will provide an action plan to resolve the problem. The department will also send the new products to an independent outside test laboratory for evaluation. The department will provide an action plan for any issues found by the independent lab.

Once a year, the department will complete tests on all products and provide an action plan for any found deficiencies. The department will furthermore provide directions and warnings on the product. The directions and warnings must be accurate and complete to legally protect the company. International Law Tangible and Intellectual Property Riordan Manufacturing has a strong balance sheet because of their physical assets. The company’s physical assets include equipment, inventory and buildings. The physical assets need to be safeguarded and protected.

The corporate compliance plan dictates the company keeps a current inventory of all assets. The inventory will include the purchase price less depreciation, proof of ownership, location of asset, warranties and service agreements. All assets will be insured for current market value. All new assets will be added to the inventory list. Each month the assets will be visually inspected. Each year the insurance on the assets will be evaluated. Intellectual property is defined as creations of the mind such as inventions, literary and artistic works, and symbols, names, images, and designs used in commerce (Jennings, 2006).

Riordan Manufacturing intellectual property includes trademarks, trade secrets, patents, software, and copyrights. Patents should be secured for the following products produced by Riordan Manufacturing: plastic bottles, fans, heart valves, automotive parts, and custom plastic parts. All patents and trademarks will be examined monthly to verify they are current and up to date. To protect new products, employees in the design department will sign disclosure statements not to release information to other companies. Rick Ethridge is Riordan Manufacturing patent specialist (Virtual Organization, 2009).

He will be oversee the registering and tracking of all intellectual property. Legal Forms of Business Riordan Manufacturing is aprofit corporation with unlimited duration, free transferability of interest, limited liability for shareholder and owners, continuity, and centralized management (Jennings, 2006). The company will comply with the Model Business Corporation Act and comply with all state and federals laws and regulations where plants are established. Corporations are governed by the Board of Directors, Officers, and Executive Committees (Jennings, 2006). A summary of corporate laws will be included the employee handbook.

Riordan Manufacturing is a public company responsible for complying with the Sarbanes-Oxley Act of 2002. The act includes additional corporate board responsibilities to criminal penalties. It also includes enhanced accounting standards. Riordan Manufacturing will file all necessary financial statements on a timely basis. The officers and directors will verify the accuracy of the financial statements. External auditors will verify compliance with the Sarbanes-Oxley Act. Governance Riordan Manufacturing will elect a board of directors to protect the interests of the company’s shareholders.

To be in compliance with Sarbanes-Oxley, the board of directors will consist of a majority of members who are independent (Jennings, 2006). Corporate governance principles include: examination of compensation paid to executives, accounting internal controls, verifying accuracy of financial statements, and control over management risk (Jennings, 2006). Corporate governance must go beyond the laws and strive to accomplish the goals and mission of the corporation. 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. Enterprise Risk Management-COSO The Committee of Sponsoring Organizations of the Treadway Commission (COSO) is a private organization, in the United States, providing guidance on organizational governance, business ethics, internal control, enterprise risk management, fraud, and financial reporting (Landsittel, 2009). According to COSO (2004), “Enterprise risk management consists of eight interrelated components. These are derived from the way management runs an enterprise and are integrated with the management process.

These components are: internal environment, objective setting, event identification, risk assessment, risk response, control activities, information and communication and monitoring. ” COSO recommends using Enterprise Risk Management (ERM) as an approach to identify and mange uncertain risks to the corporation. These risks are managed through strong and reliable internal controls. Riordan Executives and Directors will implement ERM to include: perform risk assessments, identify risk responses, educate and train all employees on risk results (Applegate, 1999).

Specific Laws Pertaining to Riordan Manufacturing Riordan must comply with all federal, state, and local laws, rules, and regulations. The following are some of the laws, rules, and regulations that pertain to Riordan Manufacturing: Clean Air and Water Act- Many manufacturing companies throughout the world use plastics. There are many different laws and regulations that affect plastic production (Murner, 2009). Riordan plants are located in the United States and China, a knowledge of each counties laws regarding air and water must be obtained.

Riordan must be in full compliance with the Clean Air and Water Act by taking immediate actions to any violations. Riordan will assign a Director to be responsible for compliance to federal, state, and local laws. The Director will review all laws and communicate all information obtained to all employees to ensure full compliance. Occupational Safety and Health Administration (OSHA)- The Director each month will conduct a safety inspection to verify compliance with all OSHA regulations. Compliance to OSHA regulations will reduce work-related accidents, injuries, illnesses and death.

OSHA information will be posted on all employee bulletin boards. The company will have a mandatory safety meeting each month for all employees. OSHA regulations will be discussed. The Director will ask employees for feedback on any known OSHA non-compliances. Federal Trade Commission Act- All products produced by Riordan must comply with the Uniform Commercial Code to eliminate the possibility of intentional tort, negligence, and strict tort liability (Jennings, 2006). Riordan will ensure current and accurate information is clearly printed on all products.

Legal actions will be reported to Riordan’s Corporate Compliance Officer and the Chief Legal Counsel. Procedures when laws are violated Riordan will comply with federal, state, and local laws, rules, and regulations. The Riordan employee hand book states, “As an organization, Riordan will comply with all applicable laws and regulations, and we expect our 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 (Virtual Organization, 2009). Riordan employees are required to report any violations of applicable laws, regulations, Corporate Compliance requirements, and Code of Business Conduct and Ethics. Riordan encourages employee suggestions and input. Any possible violations that could result in litigation against Riordan shall be immediately reported to senior management. The Corporate Compliance Officer will oversee the Compliance Plan and any violations to laws. Violations will be investigated and reported with an action plan. The Corporate Compliance Officer will communicate with the President/CEO during the investigative process.

After the investigation, a corrective plan will be formulated. Quick and immediate action will be taken to any violations including discipline, dismissal and legal action. Conclusion The above Corporate Compliance Plan was formulated to insure Riordan complies with applicable rules, laws, and regulations. The Corporate Compliance Plan stresses the importance of good strong 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. References Applegate, D. (1999). Struggling to incorporate the COSO recommendations into your audit process? The Institute of Internal Auditors. Retrieved January 9, 2010, from http://www. cosco. org/audit_shop. htm COSO-Committee of Sponsoring Organizations of the Treadway Commission home page. Retrieved January 9, 2010, from http://www. coso. org/default. htm Jennings, M. (2006).

Business: Its legal, ethical, and global environment (7th ed. ). Stamford, Connecticut: Cengage Learning Murner, C. (2009). Plastics, Electronics and the Environment: How New global Regulations Affect Material Choices. Plastics Technology. Retrieved January 9, 2010, from http://www. ptonline. com/articles/200610fa2. html Virtual Organization: Riordan Manufacturing. (2009). Retrieved January 9, 2010, from University of Phoenix, Law/531 Web site: https://ecampus. phoenix. edu/secure/aapd/cist/VO _ _

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