Brochures

            Cover and sample spread for
            annual technology survey brochure.
The Strategy Paradox
      Cover, table of
                                                                               ...
Remedies and prescriptions for
                                      health care providers and life science
              ...
Financial Foresight
A look at the latest topics effecting private equity, hedge funds, mutual funds, banking, securities, ...
Getting to the point
                                                                                              Women c...
Trifold uses solid green panels to highlight a
quote from the CEO and pertinent statistics.
Anita Riviello's Portfolio
Anita Riviello's Portfolio
Anita Riviello's Portfolio
Anita Riviello's Portfolio
Anita Riviello's Portfolio
Anita Riviello's Portfolio
Anita Riviello's Portfolio
Anita Riviello's Portfolio
Anita Riviello's Portfolio
Anita Riviello's Portfolio
Anita Riviello's Portfolio
Anita Riviello's Portfolio
Anita Riviello's Portfolio
Anita Riviello's Portfolio
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Anita Riviello's Portfolio

  1. 1. Brochures Cover and sample spread for annual technology survey brochure.
  2. 2. The Strategy Paradox Cover, table of Media & Entertainment May 2008 Discussion document contents and sample spread for brochure addressing the future of media. 1 Table of Contents By creating and managing a portfolio Chapter 10 of real options on the contingent elements Preparing for the Introduction I Introduction ........................................................... 2 of alternative optimal strategies, companies can resolve the Strategy unpredictable II Uncertainties in Media and Entertainment ............. 3 Paradox. Part I: Foundations of The Strategy Paradox Preparing for the unpredictable The right portfolio of strategic options creates value indirectly Chapter 1: What Strategy Paradox ........................... 6 Scenario building allows companies to create optimal strategies and identify core and by mitigating strategic risk, and directly, when the options are Chapter 2: The best-laid plans.................................. 8 contingent elements. While it is not easy to make investments in core elements, investing in contingent elements is even more challenging. exercised. Chapter 3: Who dares wins…or loses ...................... 9 Chapter 4: The limits of adaptability....................... 11 Exercising options involves integrating the target company with all or part of the parent Chapter 5: The limits of forecasting ....................... 13 The downside of “robust” strategies in addressing the company’s operations to allow the parent company to pursue new opportunities, transforming Chapter 6: It’s about time ...................................... 15 an option into a commitment. It is the ability to abandon an option that makes it truly an Chapter 7: Making choices vs. creating options ...... 18 unpredictable option, and not merely a delayed commitment. Many companies end up building “robust” strategies — strategies that are “good enough” under all possible scenarios. Identifying a robust strategy eliminates strategic options on Strategic Flexibility is illustrated as a loop. Once an organization has gone through the process Part II: Resolving The Strategy Paradox contingent elements, leaving every element of that strategy as a core element. Robust of building scenarios, developing optimal strategies, and acquiring a portfolio of strategic strategies will result in mediocre results under most circumstances and standout performance options, it is time to do it all over again. As options are exercised and others are abandoned Chapter 8: Strategic flexibility ................................ 22 and, new scenarios need to be created, setting off another round of option assessment and in none. Settling on robust strategies mitigates risk but eliminates the ability to generate Chapter 9: What if…? ........................................... 24 creation. As a result, strategic planning built on Requisite Uncertainty and Strategic Flexibility is significant returns. Chapter 10: Preparing for the unpredictable .......... 28 not driven by fiscal or calendar years. Only by creating options on the contingent can a company reach the efficient frontier of strategic investment. Part III: Final thoughts about The Strategy Paradox Chapter 11: Reinventing strategy ........................... 32 How strategic options are created to address the unpredictable Consideration of the future in terms of Creating options is relatively simple: invest in a manner that confers the right, but not the scenarios and options causes current events Deloitte’s Credentials in Media and Entertainment obligation, to make additional investments at some point in the future. This makes the to no longer be merely current; they become Deloitte’s Media & Entertainment credentials ......... 36 investments of Microsoft and J&J, options on strategic elements rather than commitments to them. Each company holds valuable options on integration between its various operating signposts of the future. divisions. Although the investments are wholly owned, all three companies have postponed integrating their investments with the rest of the company, pending the resolution of key competitive uncertainties. The only way for companies to defeat the Investments have option value when they give an investor access to potentially valuable strategy paradox is to create and manage a resources or capabilities. They actually have option value when the investment structure enables portfolio of real options on the contingent the investor to manage its portfolio, which consists of an ability to preserve, exercise, or abandon options as appropriate. When an organization creates an option, the control structure elements of alternative optimal strategies can must be such that the company holding the option can direct the target company’s activities to companies defeat the strategy paradox. make future integration a possibility but not a necessity. As used in this document, “Deloitte” means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. 2 28 29
  3. 3. Remedies and prescriptions for health care providers and life science companies in financial distress Today’s rapidly changing health care environment is The Medicare program reimburses hospital inpatient Four-page whitepaper for the health care industry. In this report • Medicare outlier infected with symptoms of higher anxieties, rising costs, services under its prospective payment methodology. litigations: p. 1-2 more litigation, greater regulatory scrutiny, tighter budgets, Reimbursement is calculated by using diagnostic • Distressed hospitals and declining numbers of the insured, and a general sense of related group (DRG) codes which are determined by bankruptcy: p. 2-3 dis-ease about the future. patient-specific diagnostic and procedure codes. The • Investigations into Medicare program does provide for additional amounts hospital-physician When health care providers and life science companies to be paid over and above the DRG reimbursement when arrangements: p. 3-4 find themselves in financial distress due to market forces the cost of treating a patient exceeds predetermined cost • Calculating out-of- or regulatory actions, a number of remedies can be thresholds by a “large” amount. network insurance reimbursements: p. 5 prescribed to help cure what ails them. Without the sound • Improving gross-to- diagnosis and informed treatment of industry specialists, “The real costs of treatment, however, can be very difficult net revenues for life however, many providers and companies may face to measure,” noted Rob Cepielik, a partner with Deloitte sciences companies: dire — or even terminal — consequences later on. Financial Advisory Services LLP (Deloitte FAS). According p. 5-6 to Cepielik, Medicare regulations prescribe a formulaic This publication contains general The best advice always begins with preventative medicine. approach to determining costs, based upon gross charges information only and Deloitte But when the financial wellbeing of an organization or a associated with the medical service provided, and applying Financial Advisory Services LLP is not, by means of this publication, company is in jeopardy, acting early and swiftly can help historical cost-to-charge ratios to convert charges to rendering accounting, business, to restore vigor to the institution. A number of current cost data. financial, investment, legal, tax, conditions in the marketplace may require the attention or other professional advice or services. This publication is not a and experience of specialists, in order to get the best “This is where some facilities get into trouble,” Cepielik substitute for such professional treatment leading to financial health. said. “Regulators and prosecutors have accused providers advice or services, nor should it of rapidly increasing charges from year to year, allegedly be used as a basis for any decision or action that may affect your Medicare outlier litigations creating more Medicare outlier payments than they are business. Before making any Hospitals and other health care providers face increasing entitled to.” decision or taking any action scrutiny from federal and state regulators and prosecutors that may affect your business, you should consult a qualified due to the growing number of alleged suspicious or professional advisor. questionable payments made by the Medicare and Medicaid programs to providers. One such area of The best advice always Deloitte Financial Advisory Services LLP shall not be concern on the Medicare front is “outlier reimbursement” for hospital inpatient services. begins with preventative responsible for any loss sustained by any person who relies on this publication. medicine The first phase includes responding to document requests, Sordillo contended that regional issues and demographics Hospital-physician arrangement investigations Many companies operate on reserves based on Deloitte's experience in medicare outlier electronic discovery, and even some reflection on potential in the nation’s Northeast could be aggravating the As “gatekeepers” into the medical system, expectations about the number of products that will be Deloitte experience with usual customary and investigations defense or negotiation strategies. Additional phases of the pressures, including a high percentage of uninsured non-hospital-employed physicians who have arrangements returned, Medicare and Medicaid reimbursements, prompt reasonable charges • Experience with large Medicare outlier disputes investigation can include an analysis of potential damages, or under-insured patients, a high percentage of with certain hospitals are often in a position to refer payment discounts, and price adjustments. Any errors in • Experience in development of UCRs and issues in • Experience in assisting negotiating with the DOJ an assessment of the financial impacts of a settlement on Medicaid-dependent patients, an excess of hospital patients to those hospitals. Such arrangements might estimates or reporting can impact the tracking of revenues litigation between insurers and providers • Forensic discovery capabilities the provider, and an analysis of operational improvements bed capacity, high labor costs, and a high average include admitting privileges for the external physicians, greatly. Further, these issues can be magnified when the • Experience in data mining in claim payment • Extensive Medicare pricing experience which may be required in order to survive, according to length-of-stay by hospital patients. “In addition, many agreements that lease office space to outside physicians, complexity of the supply chain at the international level is information, and in applying knowledge of claims • Medicare outlier calculations Cepielik. hospitals are competing with the entrance of new specialty and certain joint venture business arrangements between taken into account. processing systems and provider contracting • Hospital finances modeling hospitals into the marketplace,” Sordillo added. hospitals and external physicians. • Knowledge of payment issues with respect to • Hospital restructuring experience When addressing Medicare outlier litigation issues, Helping companies estimate potential losses contracted versus non-contracted providers • Experience with hospital operations and strategic providers who react quickly by assembling a team “Zone of insolvency” In recent years, the Office of the Inspector General (OIG) As specialists help life science companies estimate • Experience with the development of econometric structuring of qualified legal, forensic and financial specialists to “All this operational distress can lead to strained liquidity, and the DOJ have been aggressively enforcing existing the potential losses in misreporting of gross-to-net and statistical based models to develop supportable investigate both the allegations in the presenting matter, significant expenditures of cash, underfunded capital Anti-Kickback statutes and physician self-referral statutes components, numerous factors are taken into account. analysis of UCRs as a basis used in the development A threshold of suspicion and the long-term implications of the issue are generally in expenditures, shortfalls in pension obligations, and the loss (the “Stark Law”) in connection with such arrangements. Bahl says one must analyze and be familiar with the of reimbursement practices Cepielik noted that the Department of Justice (DOJ) a better position to address the ongoing, short-term and of financial flexibility,” said Sordillo. These pressures can, in provisions in contractual arrangements with wholesalers, has conducted multiple investigations into charge- long-term needs of their organizations, Cepielik said. turn, lead the hospital into what he described as “a zone “The concern is that these arrangements, if structured the shelf-life or expiration date of each product, and Deloitte experience with life science companies setting practices of providers when it believes there was of insolvency,” characterized by depleted cash reserves, a beneficially for the physician, might influence medical analysis of historical trends in inventory movement • Gross-to-net advice reason for suspicion. The DOJ has taken an interest in looming liquidity crisis, an unsustainable balance sheet, decisions, and the regulators want to prevent the involved patterns. Similar considerations can help many companies • Assistance on contract advice and investigations Distressed hospitals: Operating in cash flow triage circumstances known as “Turbo Charging,” when charges violations of covenants, and the loss of employee and parties from gaining financially by making such medical maintain accruals around cash discounts for prompt • Broad experience in life sciences and health care The financial health of the nation’s hospitals is in a state of are substantially increased in excess of an increase in costs patient confidence. “Turnover of staff and doctors at the decisions,” said Gary Keilty of Tampa, a principal at Deloitte payments, and reserves to allow for historical losses • The Center for Health Solutions — a consulting crisis. “More than half of the hospitals in the United States associated with inpatient care. hospital are one of the early, tell-tale signs of trouble,” Financial Advisory Services LLP. relating to uncollected revenues. arrangement involving Deloitte Financial Advisory are now technically insolvent or at risk of insolvency,” said he said. Services LLP and thought leaders in the industry John Sordillo, a partner in the Reorganization Services “The potential damages being sought in repayment to group of Deloitte Financial Advisory Services LLP. “More According to Keilty, hospitals can face many challenges in Companies also continue to be challenged by the Medicare can be large — into the hundred millions of than 2,000 of the nation’s 4,900 acute-care hospitals “At Deloitte FAS we have assisted troubled providers by managing their physician arrangements, including expired struggle to manage chargebacks — amounts claimed by dollars — a ‘break-the-bank’ issue for many facilities,” helping them conduct ‘wellness checks,’ and arresting contracts, the lack of written contracts, undocumented wholesalers as a result of difference between contract and Contact: do not make a profit treating patients. Of the profitable Mark J. Abernathy Cepielik said. “These facilities face a potentially long road hospitals, approximately 1,000 do not generate sufficient early signs of financial distress, and have helped facilities modification of payment terms, contracts incorrectly wholesale prices. “Under these arrangements,” Bahl said, Partner, Deloitte Financial Advisory Services LLP with many phases, in order to deal with the challenges cash flow to fund essential, nondiscretionary capital reorganize their operations — taking remedial steps outlining services to be provided, and payment terms in “companies need to keep tight control around pricing and Tel: +1 813 470 8613 that accompany an outlier investigation.” expenses necessary to comply with regulations, or to towards improving cash flow and the development of leasing agreements that do not meet fair-market value. inventory movement, especially considering transactions E-mail: jabernathy@deloitte.com remain competitive with increasingly dominant academic a viable business plan, a sound balance sheet, and the that generate negative chargebacks.” Cepielik outlined four general phases, the first of which medical centers,” Sordillo added. consensual resolution of interests,” Sordillo said. Yogesh Bahl involves a period of rapid response for the provider. Bahl indicated that rebates are another component in Partner, Deloitte Financial Advisory Services LLP “It’s very important for these facilities to quickly select What are the causes of this financial illness? “In most cases,” Sordillo said, “the goal is to avoid Chapter the gross-to-net calculation, and can take the form of Tel: +1 212 436 6942 appropriate legal counsel and financial consultants, so that “Many of those hospitals must rely on alternate and 11 bankruptcy proceedings if possible, since that process volume or pricing rebates provided to organizations like E-mail: ybahl@deloitte.com they can start the process on the right track,” said Cepielik. generally unstable sources of funding, including can be time-consuming and costly, and since an internal independent pharmacies, managed care organizations, and Robert Cepielik governmental subsidies and philanthropic contributions,” reorganization effort is driven by management — rather group purchasing organizations (GPOs). Partner, Deloitte Financial Advisory Services LLP Sordillo said. “As states and municipalities begin to limit than a bankruptcy court. However, an out-of-court Tel: +1 215 299 5212 spending in the face of slumping tax revenues and a reorganization effort can be difficult to accomplish without Bahl reported that such complex contractual arrangements E-mail: rcepielik@deloitte.com weakening economy, the financial health of many hospitals court oversight and the benefits can be more difficult to coupled with the unpredictability of the marketplace Gary Keilty achieve.” make it imperative for life science companies to consult The potential damages being sought is likely to deteriorate further,” he added. “In some cases,” Sordillo said, “a facility might want appropriate specialists that are familiar with the life science supply chain in order to improve gross-to-net revenues. Principal, Deloitte Financial Advisory Services LLP Tel: +1 813 273 8398 “Hospitals not earning a profit on patient care are more in repayment to Medicare can be likely to become insolvent when they can no longer sell or to consider a so-called “pre-packaged bankruptcy,” an abbreviated, court-approved process that generally involves Further, the issues discussed above become more complex E-mail: gkeilty@deloitte.com John Sordillo borrow against assets, or receive emergency governmental large — into the hundred millions aid to fund losses,” Sordillo added. The result of these circumstances can lead to marginal earnings or even lower restructuring costs and less business disruption — but also has some disadvantages, including difficulty in the context of international strategic alliances where culture and different business practices can impact the Partner, Deloitte Financial Advisory Services LLP Tel: +1 212 436 6634 of dollars — a ‘break‑the‑bank’ chronic operating losses, the inability to make needed capital expenditures and improvements. “Many providers in dealing with contingent claims and the rejection of contracts, and a compressed time frame for making return on investment of such deals. E-mail: jsordillo@deloitte.com issue for many facilities may encounter serious liquidity crises and face the prospect of radically restructuring — or worse — shutting operational improvements.” About Deloitte Deloitte refers to one or more of Deloitte Touche Tohmatsu, a Swiss Verein, and its network of member firms, each of which is a legally separate and their doors.” independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu and its member firms. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Copyright © 2009 Deloitte Development LLC. All rights reserved. Member of Deloitte Touche Tohmatsu
  4. 4. Financial Foresight A look at the latest topics effecting private equity, hedge funds, mutual funds, banking, securities, and insurance Forensic testing: What is your data trying to tell you? Investment management firms are under mounting pressure from “Your forensic testing program should really go beyond that day-to-day regulatory agencies and investors to demonstrate that they are managing transaction testing within your compliance program,” says April Lemay, risks effectively and meeting compliance standards. a principal in Deloitte & Touche LLP’s Regulatory & Capital Markets Consulting practice. “Tests should analyze trends over time to facilitate the Four-page whitepaper “Many firms are employing forensic tests to help them manage risk, assess identification of issues that can be seen when you are looking at a more the efficacy of controls, address an increasingly sophisticated testing holistic picture.” process, and meet evolving regulator expectations,” says Adam Weisman, a partner with Deloitte Financial Advisory Services LLP. For example, if an investment management firm examines its daily trade allocations, it might be able to identify a certain scenario where there are Although there is no formal definition of forensic testing, Lori A. Richards, three instances where Account A, a performance-based account, trades for the financial industry. director of the Securities and Exchange Commission’s Office of Compliance before Account B, a non-performance-based account. In one instance, Inspections and Examinations, identified three characteristics of a good Account B trades before Account A. forensic test. Viewed together, these results may not set off any alarms. However, a In a speech before the National Society of Compliance Professionals, forensic test of this information might reveal that Account A trades before director Richards said that a good forensic test, “… provides a real test. Account B 80% of the time each month over the span of a year. As a In other words, it does more than simply repeat things you already do. further analysis of that result set, the testing procedures may apply the Second, it helps you answer the question: what am I missing? In other price that Account A received to Account B’s trade history to determine if words, it covers new material to test and validate the material you usually there was a financial impact resulting from established trading patterns. work with. Third, it adds current value. You can use it in your everyday program.” Forensic testing is a growing practice. According to a recent, informal online poll that Deloitte conducted among more than 700 financial Forensic testing is not about whether or not a firm has tested its policies professionals, 5% of the respondents surveyed said that their firms use and procedures; rather, forensic testing takes a macro view of the control forensic testing extensively and throughout their organizations, while 37% environment to identify anything that may be masked. report that their firms use forensic testing sparingly and only in certain parts of their organizations. Another 8% of the respondents say that they plan to begin forensic testing in the next 6-2 months. Only 30% of the executives polled say their organizations have no plans to employ forensic testing. (See Exhibit .) http://www.sec.gov/news/speech/spch02605lr.htm As used in this document, “Deloitte” means Deloitte LLP and its subsidiaries. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Exhibit 1: What statement best describes your firm? According to Deloitte’s recent online poll, however, investment • Technology – Forensic tests are generally custom solutions, which can Examples of testing procedures Exhibit 4: What is the primary business driver behind your use Looking ahead management firms do not review their forensic testing programs very be a challenge to firms during the development stage due to the lack of forensic testing? Investment management firms can use forensic testing to identify a As the investment management industry responds to burgeoning volumes often. Only 39% of the surveyed respondents said their firms review their of “off the shelf” software solutions. Typically, the software applications variety of procedural weaknesses and personal trading abuses in their risk 50 of regulatory information requirements from regulators and investors, the programs either semiannually (%) or annually (28%). The remaining that firms use to monitor forensic tests can handle both large data sets 15% management programs. use of forensic testing to assess the quality of the information provided 6% review them only as issues are discovered. (See Exhibit 2.) and statistical testing well. They also can have built-in procedures that can only grow. Firms that take steps now to develop, implement, and 30% enable users to construct statistical testing without programming them Trade aggregation tests analyze whether one fund or account is treated 40 Exhibit 2: How often do you review your current forensic monitor an effective forensic testing program may find it easier to respond from the start. Examples of such applications include SAS, STATA, SPSS, better than another in a statistically significant way within a day of testing program? to and even anticipate these requests going forward. and others. Many applications can provide this utility; which ones firms trading the same security. “There may be instances where subtle trading choose will depend on the software environment, employees’ technical patterns suggest there is some persistent favoritism or tendency of the 30 qualifications, and the information systems that are already in place. fund manager to put the trades in one fund or another,” says Dan Levy, a 50% 37% 11% principal with Deloitte Financial Advisory Services LLP. “Sometimes these • Data management – Managing the quality and quantity of data is 20 18% 15% patterns are difficult to observe when you are just scanning through data, a growing challenge for some firms. Disparate systems, incomplete 31% but if you start performing actual tests, you would notice these patterns.” data records, or inaccurate data may lead to inaccurate or inconclusive 30% results. For example, firms looking to analyze trading data may require Trade allocation tests examine whether one fund or account is treated 10 28% time stamps; it would be important to know how those time stamps 61% better than another in a statistically significant way within two to six days 12% were created. Is a time stamp based on the time within each person’s 7% We use forensic testing extensively and throughout the organization of trading the same security. As with trade aggregation, trade allocation own processing environment, or is it a system-generated time stamp? 0 We use forensic testing sparingly and only in certain parts of looks for consistent patterns that indicate that one fund may be receiving the organization 37% And are there ways to manually alter the time stamps? preferential treatment over another. Testing of compliance programs We do not use forensic testing, but have plans to do so in the Providing additional comfort to interested parties (e.g., CCOs, boards) Investment management firms find that some challenges are more Opportunity allocation tests analyze patterns of limited-offering next 6-12 months 18% Performing oversight of your service providers and financial intermediaries widespread than others. According to Deloitte’s recent online poll, 39% allocations, such as initial public offerings (“IPO”), which are not in We do not use forensics testing and have no plans to do so All of the above of the respondents surveyed say that having the right people with the compliance with current policy. For example, if a firm has a standard policy Building a forensic testing program right skill sets is the greatest challenge to implementing forensic testing. of allocating IPO shares based on percent of ownership in the fund or At least every six months Another 27% cite having the right tools, such as technology and reports; some other relevant and valid standard, this test would help determine if At least annually Creating a forensic testing program is a five-step process: 2% say that getting accurate source data is their greatest challenge; and the company is following that business rule or deviating from it. No set schedule; generally only as issues are discovered 3% believe that interpreting the results is the biggest hurdle they have to • Perform risk assessment – Building a forensic testing program begins Front-running tests examine portfolio managers’ personal trading overcome. (See Exhibit 3.) For further information, please contact: by determining the scope and level of testing to be completed within A successful forensic testing program should be an integrated component patterns against the trading patterns within their accounts to determine the forensic testing program. Using a risk-based framework, that of an investment management firm’s overall compliance program. Forensic Adam Weisman April Lemay Dan Levy Mike Fay Exhibit 3: What do you think provides the greatest challenge whether anyone is using proprietary information, such as buy and sell considers among other things the current operating environment and testing can be a key mechanism that enables the chief compliance to implementing forensic testing in your firm? Partner Principal Principal Principal recommendations, before it becomes available in the market. The question industry hot topics, helps to prioritize the data to be tested. officer (CCO) to assess the adequacy and the effectiveness of the firm’s Deloitte Financial Advisory Deloitte Touche LLP Deloitte Financial Advisory Deloitte Touche LLP is, how often do portfolio managers make such trades, are they random controls. In addition, it should work in conjunction with the day-to-day 40 Services LLP + 22 436 474 Services LLP + 67 437 2037 • Design, enhance, and execute testing procedures – The testing events, or are they happening too frequently to be random? procedures that are already implemented for specific control testing, such + 22 436 5276 alemay@deloitte.com + 67 437 3025 mifay@deloitte.com program should be defined to mitigate the risks identified and as observations, examinations of documentation, and re-performance. For 35 Insider Trading Tests look for patterns that may indicate the use of aweisman@deloitte.com danlevy@deloitte.com prioritized in step one above. Factors to be considered in this step example, in the area of fair-value pricing, the compliance program control material nonpublic information, where employees might make trades include: the availability and the quality of the data to be tested, the 30 test might involve reviewing the minutes of the Fair Value Committee, in their personal accounts before a public announcement that pushes a frequency of test execution, and the involvement of business functions while a parallel forensic test could add an additional perspective by security in a direction that is favorable to their transactions. 25 in the design of testing procedures. reviewing the daily change in prices of securities over time. 39% Portfolio pumping tests identify pattern changes near quarter-end, when 20 • Analysis of the testing results – In order to identify testing exceptions portfolio managers might be tempted to make last-minute investments that require further investigation, the analysis process should be Common challenges in building a forensic testing program 15 to enhance their funds’ performance. These tests look for stocks that are defined to include the review, interpretation, and follow-up on testing 27% Firms should be aware of the common challenges that they may outside the fund prospectus, “winners” bought at the end of the quarter, exceptions using a consistent methodology. For example, the analysis 10 21% and other evidence of “window dressing.” face when developing their forensic testing programs. Some of these process should include a clear definition of exceptions, including challenges include: 13% considerations for materiality. 5 Investment management firms employ forensic testing for a number • Skillset development – Finding personnel with appropriate talent of reasons. According to Deloitte’s recent online poll, 3% of the • Communication – In the event that there are exceptions indentified 0 respondents surveyed say the primary business driver behind their use of and background to both manipulate and analyze large sets of data is a through the analysis of the testing results, firms should have a forensic testing is to test their compliance programs; 2% use it to provide growing concern. The balance of technical and operational experience Having the right people with the right skills clearly defined communication channel to report the results to key additional “comfort” to interested parties, such as CCOs and boards of combined with the ability to apply critical thinking to analyze testing Having the right tools (e.g., technology, reports) constituents. In addition, firms should consider the appropriate level of directors; and 7% say the principal reason is to perform oversight of their results is a much sought after skill by many firms. Getting accurate source data documentation to be retained to provide a record of review and any service providers and financial intermediaries. Importantly, 50% say all Interpreting the results resulting actions taken. • Interpreting results – Another common challenge that firms face three reasons are equally important drivers behind their use of forensic is how to correctly interpret testing results. For example, one test testing. (See Exhibit 4.) • Oversight activity – The final step in building a forensic testing might seem to reflect unfair allocations, but the true interpretation program involves defining a monitoring and oversight role in order to could reflect the size of assets or specific investment restrictions. The strengthen the forensic testing program overtime. A forensic testing The results of the informal online poll were tabulated and were taken “as is” and were not audited or evaluated by Deloitte Touche LLP (“Deloitte Touche”) for accuracy and as such are not a substitute for such question becomes, how can a firm limit its results so that it focuses its professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Deloitte Touche, their affiliates and related entities shall not be responsible for any loss sustained program should be flexible to adapt to internal and external changes in by any company who relies of the survey results. resources on the real issue? One method would be to minimize false the environment, and the feedback loop from oversight activities can positives through the use of a set of filters designed to focus on certain This publication contains general information only and is based on the experiences and research of Deloitte practitioners. Deloitte is not, by means of this presentation, rendering accounting, business, financial, be an integral component of this iterative process. investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your exceptions, and clearly those will vary. business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte, its affiliates, and related entities shall not be responsible for any loss sustained by any person who relies on this presentation. © 2008 Deloitte Touche Tohmatsu
  5. 5. Getting to the point Women comprise nearly half of the Mission: To drive marketplace growth and create a culture where the best 50% U.S. labor pool. Talented. Empowered. Leaders. choose to be. Why? We are the women of Deloitte 60% 60% of accounting bachelor’s degrees are awarded to women. It’s simple. We see attracting, retaining, and developing women as a business imperative. It fuels our growth, creates the most effective teams, and distinguishes us in the marketplace by allowing us to deliver more value and innovative business solutions to our clients. Women represent a growing proportion of the shrinking talent pool, and a growing number of 50% of undergraduate business degrees are decision-makers in our client organizations are women. We have found that 50% awarded to women. creating a culture that attracts the best women helps us attract the best people. And attracting the best people helps us attract the best clients. In other words, we raise the bar and become the standard of excellence — the first choice of the most coveted talent and the first choice of the most Women now hold more than half of all sought-after clients. 50% managerial and professional positions in U.S. businesses. Source: Catalyst The Initiative for the Retention and Advancement of Women As used in this document, “Deloitte” means Deloitte LLP and its subsidiaries. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. 1 Cover and sample Putting our best foot forward spreads for Deloitte’s WIN delivers a breadth of compelling benefits throughout our organization. From workshops and development programs, social and networking events, and major sponsorships, we are helping not only our own people but also our local annual report on communities by extending their networks and driving marketplace growth. Major sponsorships Each year we sponsor a number of organizations that share our interest and the strides made for commitment in advancing women in the workplace. These conferences give many of our women opportunities to network with clients and colleagues and provide us the chance to attract new talent. The research we help fund enables us to be on the forefront of trends concerning issues that women face during their careers. Our major sponsorships have included: all employees by its • Aspen Institute — Where Will They Lead?: MBA Student Attitudes about Business Society • Catalina magazine’s Catalina Tour • Catalyst — Unwritten Rules: ”What You Don’t Know Can Hurt Your Career,” “At Deloitte, we recognize the value of providing a variety of growth opportunities and creating an environment where all of our talent can thrive. It’s important for our women to know we are Women’s Initiative “Women of Color in Public Accounting Report” • Center for Work Life Policy – Hidden Brain Drain Task Force invested in their careers and will provide them with the tools they • Fortune magazine’s Most Powerful Women’s Summit need to succeed.” • Forté Foundation Barbara Adachi, National Managing Principal, • Human Rights Campaign Network. Initiative for the Retention and Advancement of Women, Deloitte LLP • Management Leadership for Tomorrow • National Council of Women in Research — The Satisfaction Factor • Simmons School of Management Women’s Leadership Conference • Working Mother magazine’s 100 Best Work Life Congress • Working Mother magazine’s Multicultural Conference and Leadership Town Halls • Women of ALPFA and Women of ALPFA Summit • Women of NABA • Women of Ascend 8 9
  6. 6. Trifold uses solid green panels to highlight a quote from the CEO and pertinent statistics.

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