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Corporate Crime: DOJ Has Taken Steps to Better Track Its Use of Deferred and Non-Prosecution Agreements, but Should Evaluate Effectiveness

GAO-10-110 Published: Dec 18, 2009. Publicly Released: Jan 08, 2010.
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Recent cases of corporate fraud and mismanagement heighten the Department of Justice's (DOJ) need to appropriately punish and deter corporate crime. Recently, DOJ has made more use of deferred prosecution and non-prosecution agreements (DPAs and NPAs), in which prosecutors may require company reform, among other things, in exchange for deferring prosecution. In June and November 2009, GAO testified on DOJ's use and oversight of DPAs and NPAs, and this report discusses additional findings, including (1) the extent to which DOJ has used DPAs and NPAs to address corporate misconduct and tracks use of these agreements, (2) the extent to which DOJ measures the effectiveness of DPAs and NPAs, and (3) the role of the court in the DPA and NPA process. GAO examined 152 DPAs and NPAs negotiated from 1993 through September 2009 and analyzed DOJ data on corporate prosecutions in fiscal years 2004 through 2009. GAO also interviewed DOJ officials, prosecutors from 13 DOJ offices, 20 company representatives, 11 monitors who oversee company compliance, and 12 federal judges. While not generalizable, these results provide insight into decisions about DPAs and NPAs.


Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Justice To assess its progress toward meeting its strategic objective of combating public and corporate corruption, the Attorney General should develop performance measures to evaluate the contribution of DPAs and NPAs towards achieving this objective.
Closed – Implemented
We found that the Department of Justice (DOJ) lacked performance measures to assess how Deferred Prosecution Agreements (DPA) and Non-Prosecution Agreements (NPA) contribute to its efforts to combat corporate crime. As a result, we recommended that DOJ develop performance measures to evaluate the contribution of DPAs and NPAs towards achieving DOJ's strategic objective of combating public and corporate corruption. We suggested two possible measures of DPA and NPA effectiveness: whether the company successfully implements the terms of the agreement and use of implementation as a proxy measure for whether the company reformed, since DPAs and NPAs often require companies to make improvements in internal controls, compliance programs, or training to detect and prevent future wrongdoing. As a result, DOJ agreed to complete revisions to its data systems to allow it to track progress and successful completion of DPAs and NPAs. In December 2010, the Director of DOJ's Executive Office for United States Attorneys (EOUSA) submitted to the Deputy Attorney General the First Annual Report regarding the frequency and effectiveness of the Department's use of DPAs and NPAs in cases regarding business entities, compiled by EOUSA and DOJ's Criminal Division. The report displays the number of agreements, together with the number of agreements successfully and unsuccessfully concluded during fiscal year 2010. With the establishment of this annual reporting format, DOJ will be better positioned to monitor the collective and individual success of DPAs and NPAs, and gauge whether they are effective tools in deterring and combating corporate crime. As a result, this recommendation is closed as implemented.

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AccountabilityCrime preventionCrimesCriminal procedureCriminalsDefendantsFraudInternal controlsJudgesLawyersMonitoringPerformance measuresProgram evaluationReporting requirementsStandardsWhite collar crimeAssessmentsComplianceCorruptionTransparency