Revised U.S. Sentencing Guidelines went into effect on November 1, 2004. The Guidelines require the development and promotion of culture that encourages ethical conduct; require standards and procedures to prevent and detect criminal conduct and place responsibility on the board of directors and executive management. Further, the Guidelines indicate that organizations who have “effective” ethics and compliance programs in place will be granted leniency should their organization be found guilty of misconduct.

Under the Guidelines, an organization can earn leniency in the event of sentencing based on several "mitigating factors". One of the most important mitigating factors is having a program "to prevent and detect violations of the law". The Guidelines detail seven criteria against which such programs are to be judged and these include the existence of standards or a Code of Conduct and training or other communication specific to the Code of Conduct.

The Code of Conduct or Code of Ethics is an organization’s policy statement and defines ethical standards for sound corporate governance. The Code of Conduct not only establishes the is a organization’s values, but also spells out essential practices, behavior, ethics and business standards for all individuals who are employed by and represent the organization.