Data Driven Compliance Strategies

Transcription

1 Data Driven Compliance Strategies Monitoring in a High Growth Market John Auerbach Managing Partner, Greater China Fraud Investigation and Dispute Services September 14, 2011

2 The pressure of rapid growth Pharmaceutical Market Growth, Average 19% market growth over 10 years Page 2

3 The pressure of rapid growth: HCP interactions Estimated % growth in sales headcount ,000+ monthly HCP Interactions Page 3

4 The Channel - Modes of HCP Interaction Sales HCP Distributor Company Event Facilitator Hospital Association Page 4

5 Intermediary - driven corruption Company Tender / Application Hospital / Ministry Fees Bogus service contract Prescribing / formulary Power Intermediary Shareholder HCP / Administrator Page 5

6 Fragmentation of relevant information ERP HR Sales Commercial E-Approval The Tower of Babel Pieter Brueghel the Elder, c.1563 Page 6

7 Detect Patterns from Noise Page 7

8 Page 8 TECHNOLOGY DRIVEN MONITORING LEVERAGING FORENSIC DATA ANALYTICS

9 Transaction risk monitoring model Page 9

10 Transaction risk monitoring (cont d) Confidence rating is the likelihood that the exception is a genuine breach of internal controls (ie. not a false alarm) Priority rating is an indication of which exceptions ought to be investigated first, based on the Confidence rating and the financial value of the transaction examined Priority All of the exceptions are compared with one another to determine its priority. Oversight generates this value to help you target your investigative and internal audit resources. -High -Medium - Low - None Confidence The likelihood that the exception represents a genuine breach of internal control, based on the number of business rules it has broken. -High -Medium - Low -None Example : The following circumstances may not be extraordinary when assessed in isolation: Vendor with an invalid ABN Transaction processed on a weekend Transaction posted by an employee who normally doesn t post transactions on their own However, where all three circumstances exist together, the transaction would be considered higher risk and would be flagged for investigation. Page 10 10

11 Examples of risk indicators Objective Focus on samples with potential high risk indicators Leverage forensic data analytics to increase risk coverage Vendor Master File Vendor fuzzy match Name Address Bank account Phone number Employee fuzzy match Name Address Bank account Payments Unusual payment numbers Duplicate/split payments Trend by vendor category Keywords analysis Benchmark comparison Benford s law analysis Payment value Payment volume Timing Payment time lag Keywords over time Payment trend over time By value By volume Page 11

12 Customize risk indicators Sample Page 12

13 Risk indicator example 1: Rounded payments to high risk payees The following diagram illustrates a wide distribution of rounded number payments to travel agencies. Therefore, audit resources were focused on these travel agencies. Page 13

14 Risk indicator example 1 : Trending of expenses The following example illustrates that by using visual analytic techniques on both the expense amount and the count of invoices in combination, we discover anomalies and outliers for focused sample selection. (i.e., making the invisible, visible). 12M 11M 10M 9M 8M Document Date High Value and Volume compare to other trends. Samples should be focused in this area. Count of Invoices Category Category1 Category5 Category6 Category7 Category8 Expense Amount 7M 6M 5M 4M 3M Anomalies that should be investigated. 2M 1M Anomalies that should be investigated. 0M Q1 Q2 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Page 14

15 Risk indicator example 3: Multi location risk map The following diagram shows two high risk locations in red based on risk scores. The size of the circle indicates the number of samples required for testing. The detail listing of samples is also listed for the selected location. Page 15

16 The next frontier Linking compliance indicators with the mainline business intelligence capability Corporate Business Intelligence Platform Compliance Dashboard Sales and Marketing KPIs Page 16

17 Thank You John Auerbach Managing Partner, Greater China Fraud Investigation and Dispute Services 44F, Shanghai World Financial Center, No.100, Century Avenue, Lujiazui Finance and Trade Zone Center, Pudong District,Shanghai (o)