Control Freak

Happy dog days of summer, everyone. Let’s kick things off today with some reading from Compliance Week, which has some interesting insights on how to establish training programs that prepare businesses for big-time looming compliance challenges like Dodd-Frank and IFRS (maybe) and whatever else legislators can think up.

The key takeaways? One size fits all approaches can be overwhelming and counterproductive. It’s better to approach training by aiming specifically at individual functions, so that trainers and trainees can identify likely red flags and discuss how best to address them.

At Approva, we believe strongly that individual functions – Audit, IT, Finance, whatever – are the best equipped to identify risk in their business and develop appropriate controls – it’s something we’ve pontificated on from time to time, in fact. So we see real value in training approaches that take this into consideration.

In other news, we’ve got a must-read from Norman Marks, who’s been covering PWC has got to say on the many benefits of continuous audit. As Norman summarizes nicely, PWC makes some good points about how continuous audit improves on point-in-time audit snapshots – and how important it is to identify risks before deciding what to use to address them. Take a look, and let us know in the comments what you think about the piece (and the Approva shout-out).

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Tired of the sitcom-worthy Will They or Won’t They debt ceiling drama in DC? Well, have we got a diversion for you. Compliance Week brings us – courtesy of KPMG – its latest intel on typical profiles of likely fraudsters.

So now instead of fretting over whether to move your 401(k) into gold coins in the event of worldwide financial calamity, you can check out these handy dandy profiles and think on which if any of your colleagues might be most likely to pilfer, defraud or bamboozle.

According to KPMG’s research, most fraudsters are males between 36 and 45 years old. They’re often in finance or something related to that, and they’ve usually got a pretty senior role – often with more than 10 years of experience. Behavioral red flags, which make sense when you think about it, include refusal to take vacation time (lest they be found out??), big-time generosity, and an unusually keen interest in operations.

Here’s hoping no one comes to mind when you read the above.

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What’s that saying about a rising tide lifting all boats? It works kind of the same way with regulatory efforts – what seems ground-breaking (and sometimes over the top) for one gung-ho entity can become, within very little time, SOP.

Reuters has the goods this week on how the UK is working to crack down on corruption – and why companies in the US are watching developments with a very wary eye. As the Reuters piece explains, a new anti-corruption law just enacted in July in the UK prohibits entertainment of government officials and others, and experts are predicting serious impacts for companies dealing in defense, pharmaceuticals, energy and telecom – just as Dodd-Frank Whistleblower provisions have already got companies running scared.

The recommendations from legal experts? Pay serious attention to your internal controls, establish a response plan for whistleblower complaints, and develop a very clear “no retaliation” policy to prevent problems. (Hey, that internal controls advice is something we recommend, too! Small world).

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CFO has a kind of fascinating interview up this week with Kevin Abikoff, a lawyer appointed to serve as compliance monitor for Innospec, a chemical company that recently landed in a lot of hot water for violations of FCPA. (Like, $40 million worth of trouble).

In addition to some juicy tidbits on just what it is that an assigned compliance monitor does – and how much it usually costs (another nearly $4 million, apparently), he shares his thoughts on avoiding FCPA issues. We thought the illustration of this real-life big-brother consequence for running afoul of FCPA was interesting on its own, but it turns out CFO saved the best for last – Abikoff’s thoughts on what sorts of foreign transactions and arrangements should be getting serious scrutiny from the folks handling controls at organizations with international dealings.

The gist? Pay close attention to the use of commercial agents for biz dev purposes, look very closely at joint ventures, and examine the heck out of your company’s use of distributors and/or subcontractors.

Cue the “The More You Know” music . . .

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We call it like we see it at Control Freak, and sometimes that means we’ve pointed out an issue (or two) at institutions that could use more control. (For a Technicolor example or two, click here).

For reasons we don’t quite understand, several of the more egregious examples we highlighted just happened to feature various agencies of federal and state governments.

Which is why we’re thrilled today to be able to share an example of some cutting-edge work to get control of Medicare fraud. As the LA Times reports, a federal Medicare fraud strike force is going to use predictive computer analysis and monitoring to identify fishy situations across the country. So, for example, if someone is attempting to run the same scam in Detroit as in Florida, investigators should know.

This is no small thing, since a single fraudulent case can cost millions – like the 72 year-old Miami physician sentenced to 20 years for filing $46 million in fraudulent claims. With the national debt in the spotlight, the feds are anxious to save every penny they can – and Medicare fraud, which experts say could cost $60 billion a year (and no, that’s not a typo) is a great place to start.

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