Unimpeachable Mechanisms of Compliance—Sustainable Standard Setting in the Wake of the Woke

Conclusory Conclusions and Opinionated Opinions Tests of Time

While there is usually more than one reason that something bad occurs, it is often standard setters or practitioners that are rightfully or wrongfully accused of actions or inactions that may or do have a detrimental impact on an industry, case, business, or even members of a protected class. This twelfth article of the unimpeachable neutrality series will further define the newly thingified concept of a “mechanism of compliance” and emphasize why standard setters, parents, and employers should never make a rule without a provable, measurable, and defendable mechanism of compliance.

I am going to define something that already exists but just does not have a name. We all use this thing whether we are setting standards or establishing bedtimes. What is this thing I am thingifying, you ask? This newly “thingified” thing is what I call a “mechanism of compliance.” A mechanism of compliance is not necessarily a rule, it is a means of assessing compliance with a rule. On balance, a mechanism of compliance can be a tool, process, requirement, concurrent rule, or documentation that helps to achieve an objective, mitigate a risk, and enforce/assess compliance with a rule through an observable, objective, and measurable parameter or evidence which will enable a rule assessor and enforcer to levy said rule while also allowing a person to defend himself, herself, or thyself against an accusation of non-compliant, illegal, or otherwise rule violating instances, actions, or inactions.

The need for a mechanism of compliance in all rules or standards is increasingly evident and thus important in the current “woke” environment where standard setters should be making every attempt to mitigate against bias, discrimination, or other risks and dangers that do not necessarily require intent for one to willfully or unwilfully be part of a discriminatory or biased credit decision, cause of legal action, or otherwise harmful act. While there is usually more than one reason that something bad occurs, it is often standard setters or practitioners that are rightfully or wrongfully accused of actions or inactions that may or do have a detrimental impact on an industry, case, business, or even members of a protected class.

Regardless of whether such accusations are warranted, one thing is certain, the blame and demonization will inherently go to those with the power or unique position to change, govern, or control the problem. This blame game may or may not be justified, but when the sky falls, from a historical standpoint, it is those who make the rules that will carry the blame. The current environment does not afford standard setters to simply frown upon or disallow unethical behavior and requires observable, objective, and measurable parameters or evidentiary means to supplement the rules barring unethical or frowned upon actions or inactions. A mechanism of compliance, as discussed herein, is the means in which we assess and enforce such rules or standards that not only enables due process but provides the Courts, standard setters, and public a means of objectively testing whether an accusation is wrongful or rightful based on a process that can be provable or disprovable in drawing an inference or conclusions.

This twelfth article of the unimpeachable neutrality series will further define the newly thingified concept of a “mechanism of compliance” and emphasize why standard setters, parents, and employers should never make a rule without a provable, measurable, and defendable mechanism of compliance.

Mechanism of Compliance Thingified

An example of a mechanism of compliance (which must be distinguished from a rule) may be a radar gun combined with dash camera, which, when used properly, not only enforces a rule (the speed limit) but also to allow a person to defend himself, herself, or thyself against an accusation of non-compliant, illegal, or otherwise rule violating actions or inactions (speeding). The mechanisms of compliance in that example utilize the combined documentation provided by a radar gun (which takes subjectivity out of the human assessment as to whether or not one was, in fact, speeding faster than the speed limit) and a dash camera (which, when combined with the radar gun, documents the fact that you were or were not, in fact, speeding on the way to a deposition on the particular day and at the particular time as noted on the citation). This dynamic duo combines like Voltron to concomitantly establish an effective mechanism of compliance that allows the rule setter or enforcer (court of law) to assess not only an accusation of speeding (as documented by an officer on a speeding citation) but also allow for the driver to contest this speeding accusation, which can either be proven or disproven by dash camera footage of the driver, rate of speed, date, and time, which can be compared with the speeding ticket (also a mechanism of compliance if properly filled out) to determine whether the accused was in fact speeding. Such a mechanism of compliance may also serve to protect the rule enforcer (the police officer) from accusations of arbitrarily unlawful behavior like police brutality, so long as there are strict requirements that a dash or body camera always be turned on with rare or limited exceptions.

An Unenforceable Rule is Nothing More Than a Statement of Position

An unenforceable rule is nothing more than a statement of position. Standard setters, parents, and employers should never make a rule without an observable, objective, and measurable mechanism of compliance. These mechanisms of compliance are typically needed in instances where a rule is established to mitigate a very serious risk or danger that may cause physical, legal, or financial harm to persons, businesses, or even protected classes of persons. A rule without a mechanism of compliance is like measuring someone’s height without a ruler. In fact, a ruler is a great example of a mechanism of compliance that most people may have encountered anytime they see sign that says “you must be this tall” outside of some roller coasters, which provide a set minimum (and sometimes maximum) height or weight threshold or limit that a rider must fall within to ride. While some roller coasters may not require this mechanism of compliance, the roller coasters that have more loops, go faster, or simply go through a tunnel do, as some people may not be too small or large to safely enjoy said ride without a risk of falling out or hitting their head on part of the coaster. The key point here is that, in this example, there are some very serious risks (decapitation, death, or injury) that must be mitigated, and thus a mechanism of compliance should be used that eliminates subjectivity or human error as a means of mitigating a risk. These mechanisms of compliance may also ensure that someone who looks like they may be too large or small for a particular ride but in fact meets the required weight or height, can justly partake in the amusement park ride. The mechanism of compliance for a roller coaster with a height requirement is the sign that establishes the decided upon height in a non-subjective way that someone either does or does not comply with. Someone can say they are 6 foot 1 inches tall but absent a means of measuring one’s height, this proclamation may or may not be true. The fact that a driver’s license notes a height of only 5 foot 10 inches may provide some evidence that the person claiming to be 6 foot 1 inches tall is lying but, by itself, is not a sufficient mechanism of compliance, as the individual proclaiming to be 6 foot 1 inches tall may have grown taller since receiving their license at the department of motor vehicles. One’s girl or boyfriend may attest that they are a particular height but, absent a ruler or clowns hand specifying both the actual and required height, such attestation is merely just speculation as there are a plethora of reasons as to why the attestor may attest to said compliance with the height requirement. It is not until one establishes a mechanism of compliance that can be objectively observed or measured that a rule should ever be considered as being set. As an unenforceable rule is nothing more than a statement of position that, for example, extremely small children should not ride the “death master express” rollercoaster. Absent one not only establishing a clear rule, but also a sufficient means of enforcing that rule, the risk is not sufficiently mitigated. One can scream all the unenforceable rules in the world at the top of every mountain, but this will serve to be little more than a statement of position on frowned upon behavior if one cannot enforce these rules.

What Makes a Good Mechanism of Compliance

A mechanism of compliance can come in many forms, as a tool, definition, concurrent rule, supplemental guidance, or technological advance can act as a sufficient mechanism to ensure compliance with a rule, requirement, or provision disallowing a frowned upon behavior, action, or inaction. This may sound complicated, but many if not all individuals, employers, and standard setters have already put a mechanism of compliance in place multiple times without realizing it. When you put the kids to bed, we subconsciously define going to bed at bedtime as going sleep, eyes closed, lights off, television off, and even turning off the cell phone. Regardless of how one defines going to bed at the established bedtime, those who have ever tried to enforce this rule will likely have experienced instances where their kid argues that they were in bed at bedtime but the facts and evidence dictate they were actually playing a video game, up texting friends, watching television with the sound really low, or any other activity that may or may not be in compliance with the intent and objective of establishing a bedtime for which all good little kids need to go sleep (at least on a school night).

Sometimes it is necessary to define a component of a rule (going to sleep at bedtime) by defining not only what that component or requirement is, but also what it is not. For example, it may not be sufficient to simply say go to bed and, thus, one may also have to specify that the lights, phones, televisions, and video games all must be turned off. This is an example for which the definition of going to bed at bedtime is more clearly defined by virtue of defining what not going to bed at bedtime is. Thus, a child who stays up all night texting a friend can be said to be following the bedtime rule if the parent logs into their cell phone provider’s website and sees that someone was texting or talking on the phone line used or in the possession of their child. While there are many additional processes necessary to prove that it was your son texting his girlfriend until 7:00 a.m. on a school night, parents have unknowingly established an observable, objective, and measurable mechanism of compliance that will mitigate the risk of a child not complying with bedtime. In the instance where multiple children are involved and there is a possibility that a little sister may like to play “Candy Crush” on her big sister’s phone and may accidently send out texts or make calls on the cell phone while playing, a requirement not to delete one’s text or call history may be sufficient documentation to complete the effective application of a mechanism of compliance.  

Documentation Saves Lives and Careers

A mechanism of compliance is, in my experience, very helpful as it relates to standard setting or promulgation. These mechanisms of compliance can even act as a tool that allows those charged with determining compliance to assess each case fairly while minimizing the likelihood of unfair punishment being levied upon an individual that has been wrongfully accused; as a sufficient mechanism of compliance will serve to both prove and disprove noncompliant actions or inactions. This is particularly true relative to ethical standards with regards to bias, discrimination, and/or assessing a professional’s actions or inactions where rules that require documentation, developmental steps, or reporting disclosures act as mechanisms of compliance that not only enforce a rule but help mitigate a risk or achieve an objective for which a rule is made to accomplish. An example of this may be the scope of work or record keeping rules that USPAP utilizes when an appraiser acting as an appraiser performs an appraisal or renders a deliverable appraisal report. These are examples of concurrent rules that not only consist of requirements to follow, but also act as a way that an appraiser can document their decisions, opinions, and conclusions while also providing that the scope of work was or was not sufficient for the engagement, the needs of the users and clients, and the intended use while helping enforce the harder to judge ethics related rules. Defining and documenting the attributes or decisions beseeched by these mechanisms of compliance may seem annoying at times but are often necessary to prove or disprove compliance with ethics rules with regards to bias, as what one considered or did not consider is either in the file or not in the file to the appraiser’s detriment or benefit. These requirements may come into play when accusations of bias or discrimination are levied and can be observed objectively by an experience reviewer, expert, and court if need be. Another example of this is where NACVA, AICPA, and ASA all bifurcate their engagements into two or more engagement types which define not only what an appraisal or valuation is but also define a calculation and/or limited scope appraisal, which helps to define what a valuation or appraisal is by providing a definition of what an appraisal or valuation is not (i.e., a calculation or limited scope appraisal).

Mechanized Compliance with Standards

A mechanism of compliance must usually be supplemented with guidance in the form of advisory opinions (USPAP), Q&A’s (NACVA, USPAP, and AICPA), or other supplemental guidance that may be formal or informal (the unimpeachable neutrality series) as a means of providing an effective way to educate the masses and assess compliance with a rule. Most if not all of us have used a mechanism or compliance at some point in our lives or careers without realizing it. Most mechanisms of compliance take time to develop and require constant reassessment to improve upon their effectiveness and prevent obsolete mechanisms of compliance from being used way past their good through date.

The key is continuous monitoring of the sufficiency of said rules and mechanism of compliance as a means of making what otherwise is considered a perfect set of standards or rules more perfect overtime. This may sometimes require an entirely different rule or expansion of a current rule to achieve the objective sought or mitigate the risk needing to be minimized. Mechanisms of compliance are not to be confused with punishment, as punishment is a totally different function that can be a mechanism of compliance but is not, by and of itself, sufficient in most cases. A sufficient mechanism of compliance should not only focus on thawing said undesirable acts or practices, but also must protect those who may be rightfully or wrongfully accused of noncompliance by providing them an out or way to prove their compliance. Having an objective, setting a rule to achieve said objective, and establishing a mechanism of compliance which allows noncompliance with said rule to be assessed and enforced are three critical steps that must supersede punishment and if ignored may cause more harm than good. One does not have to thingify something to have used it in the past or be able to effectively apply it in the future. There is no shame in being ignorant to a problem so long as the standard setter, parent, or employer constantly seek a path to achieving the objectives sought while mitigating the risks inherent to the objective. There is nothing wrong with acknowledging being less than perfect, as the first part of being woke requires that one acknowledge ever being asleep.

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Zachary Meyers, CPA, CVA, has been retained in over 2,600 cases as a testifying, consulting, or joint/court appointed expert. He has testified and been qualified as an expert specific to civil, marital, and criminal litigation. Mr. Meyers was elected to the NACVA Standards Board in 2016, appointed Vice-Chair in 2017, elected Chair in 2018, and in 2019, was re-elected as Chair, which promulgates professional standards for financial professionals, analysts, and experts. Mr. Meyers was appointed as NACVA Standards Board liaison representative for the Global Association of Certified Valuators and Analysts (GACVA) Advisory Council in 2020, which liaises with NACVA’s international chapters in Africa, Canada, Europe, India, Taiwan, and Southeast Asia. In 2021, Mr. Meyers was elected to the Business Valuation Resource Panel of The Appraisal Foundation (TAF), whose purpose is preserving and improving the public trust in valuation.

Mr. Meyers can be contacted at (304) 690-2619 or by e-mail to czmcpacva@CZMeyers.com.