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IFRM - Investigation and Fraud Risk Management


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A Protiviti presentation discussing IFRM and what organizations need to build a solid infrastructure for evaluating, mitigating, investigating, reporting and monitoring their risk of fraud, corruption and misconduct.

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IFRM - Investigation and Fraud Risk Management

  1. 1. Investigations & Fraud Risk Management Solution Investigations | Forensic Accounting Fraud Risk Management | Anti-Corruption
  2. 2. © 2013 Protiviti Inc.1 Protiviti Background Protiviti ( is a global consulting firm that helps companies solve problems in finance, technology, operations, governance, risk and internal audit. Through our network of more than 70 offices in over 20 countries, we have served more than 35 percent of FORTUNE® 1000 and Global 500 companies. We also work with smaller, growing companies, including those looking to go public, as well as with government agencies. Protiviti is a wholly owned subsidiary of Robert Half International Inc. (NYSE: RHI). Founded in 1948, Robert Half International is a member of the S&P 500 index. IFRM Practice • Deep SME in anti-corruption, fraud, investigative due diligence and use of enabling technologies to drive compliance • Forensic Accounting • International Investigations • Fraud Risk Management Governance Portal • More than 400 Financial Control and Assessment implementations • 150+ GRC customers Risk Technologies Group • Strategic division of Protiviti specializing in software development and technology integration • Responsibility for design, development and support of Governance Portal • Operations in US and India • 24 X 5 Customer Support • 2,900+ professionals • 1,000+ clients • 70+ offices • Over 20 countries in the Americas, Europe and Asia-Pacific Protiviti is one of the fastest growing consulting firms worldwide. Our revenues have increased from US $15 million in 2002, to US $453 million in 2012.
  3. 3. © 2013 Protiviti Inc.2 Investigations & Fraud Risk Management Solution Understanding | Building | Executing Protiviti’s Investigations & Fraud Risk Management consultants help organizations build a solid infrastructure for evaluating, mitigating, investigating, reporting and monitoring their risk of fraud, corruption and misconduct. Understanding organizational vulnerabilities and establishing an appropriate framework to identify and respond to them is essential in today’s global marketplace, as regulators are demanding more active management and investigation of a wide range of risks including financial crime, fraud and corruption. Our Investigations & Fraud Risk Management professionals assist organizations with building sustainable anti- corruption, investigative and fraud risk assessment processes and developing anti-fraud, anti-corruption and investigative programs and controls to meet fiduciary and regulatory responsibilities. We support organizations in their efforts to identify, triage, investigate, report and monitor a wide array of risks at every level, from the performance of risk assessments, program design or remediation, risk governance, employee training to audits of anti-corruption, fraud and investigation programs and processes. The IFRM team’s unique blend of anti-corruption, fraud risk management and investigative subject matter expertise, can quickly identify program shortcomings and remediate your critically important programs. The team also has extensive experience in undertaking investigations of suspected violations of those programs leveraging investigative, forensic accounting and technology disciplines across our global footprint to provide our clients the experience and local resources necessary to gather the facts necessary to make informed business decisions. Understanding Building Executing
  4. 4. © 2013 Protiviti Inc.3 Investigations & Fraud Risk Management Solution IFRM Services The IFRM Practice’s services include: • Third-Party Anti-Corruption • Investigative Due Diligence • Forensic Accounting / Financial Crime Investigations • Anti-Corruption Advisory • Bribery and Corruption Investigations • Fraud Risk Management • Corporate Investigations Advisory / Financial Intelligence IFRM practitioners bring a strategic approach to assisting clients in identifying issues, developing and implementing action plans and building sustainable regulatory compliance, investigative and monitoring processes that drive accountability and meet or exceed regulatory expectations.
  5. 5. © 2013 Protiviti Inc.4 Investigations & Fraud Risk Management Solution Protiviti can rapidly deploy investigative teams wherever they are needed. With ~2900 professionals,70+ offices in over 20 countries, Protiviti has the bench strength, local knowledge and language capabilities to fully support legal, compliance and security professionals across a broad spectrum of investigative requirements. Global Reach/Local Resources Protiviti’s Governance Portal enables some of the world’s leading companies to better manage and track their global compliance responsibilities. The portal’s anti-corruption module enables companies to apply a risk-based approach to the third parties with whom and through whom they do business and is designed to serve as the backbone of an anti- corruption program. Working Smart with Enabling Technologies While having a thoughtfully conceived anti-corruption policy is critically important, implementing the underlying procedures and aligning them with internal controls is what operationalizes an anti-corruption program. Protiviti has unparalleled expertise in putting internal controls into production in global organizations. Including anti-corruption subject matter experts in the design and implementation of controls enables global companies to put their anti-corruption programs into action. Aligning Controls and Internal Audit Programs with the Anti-Corruption Program
  6. 6. © 2013 Protiviti Inc.5 Working Smart with Enabling Technologies – Third Party Anti-Corruption Key Features and Differentiators Turn Key Solution – Data Intake; Email; Proprietary Risk Scoring; Case, Work Flow and Document Management; Integrated Investigative Due Diligence; Audit Trail; Project Management and Performance Metrics Automated Risk Scoring - Significantly Narrows Focus Allowing for More Judicious Use of Limited Resources Highly Rated GRC Platform - with Deep Anti-Corruption and Due Diligence Investigation Subject Matter Expertise Highly Adaptable Solution - that Makes Extensive Use of Conditional Logic/Dynamic Questionnaires, Client Branded Surveys and User Interfaces Drives Accountability - and Can Be Used to Manage Ongoing Correspondence, Link Through to Online Training and Annual Certification Single Solution - To Manage Overall Third Party Program Across Multiple Countries, Languages, Lines of Business
  7. 7. © 2013 Protiviti Inc.6 Supporting Your Third Party Anti-Corruption Requirements Third Party Data Intake Risk Scoring Investigative Due Diligence Disposition Your GRC Align key elements of client’s third party anti- corruption program with program scope, controls, frameworks and hierarchies. Within these hierarchies, defined corporate objectives, risks, controls in support of internally-driven performance objectives. Program Alignment Agree on phased deployment and accountability strategy to ensure each in scope third party is routed through anti-corruption module before onboarding or contract renewal. Piloting the program in a few key markets allows for less disruption. Deployment Defining Roles, agreeing on Questionnaire wording; language; risk scoring; approval hierarchies; case, work- flow & document management; due diligence protocols. Communicate internally/ externally to raise awareness/accountability. Workflow & Survey Deliver risk score cards, due diligence reports and overall project and individual performance metrics via configurable workflow and flexible, ad hoc reporting that ultimately drives management’s decision- making. Reporting & Analysis WE WILL HELP YOU MOVE FROM STRATEGY TO EXECUTION
  8. 8. © 2013 Protiviti Inc.7 Third Party Anti-Corruption Risk Score Card for Compliance Review Business Sponsor Initiates Onboarding Third Party Completes Survey Business Sponsor Reviews Responses High Risk 3Ps Subjected to “Swift Report” Research Compliance Review & Disposition
  9. 9. © 2013 Protiviti Inc.8 Third Party Anti-Corruption Due Diligence Investigations Swift Reports These are risk and volume appropriate due diligence investigations based entirely on open-source, publicly available information in English and, wherever possible the local language. They include the following: English and Local Language Adverse Media Research (28 languages) English and Local Language Adverse Internet Research A More Fulsome, Secondary Review of the Watchlist Research Already Performed Corporate registration (If available within the applicable country/region) Critical Analysis of Findings Color Coding to Assist in Review Prioritization (Useful when dealing with large volumes of reports) Action Items Raised for Follow-Up by Business Sponsors, Compliance and/or Protiviti Investigators Enhanced Due Diligence Typically used judiciously when significant open items cannot be resolved using open sources. EDD investigations often include: Site Visits, Photographs, Neighborhood Investigations Manual / Local Public Records Research Limited Human Intelligence Research
  10. 10. © 2013 Protiviti Inc.9 Investigative Due Diligence Key Features and Differentiators Purpose • At its essence, Investigative Due Diligence is targeted research on individuals and entities to provide detailed, timely information to enable our clients to make more informed risk-based decisions as to the overall suitability of prospective business partners or existing commercial relationships whose circumstances have changed or in which the relationship is under review. In investigations and behavioral science, it is often said that the best predictor of future behavior is past behavior. Protiviti investigators painstakingly examine wide ranging information sources to examine any past behavior that could be predictive and present those findings in the context of the specific risks the client is seeking to mitigate. Multiple Needs Met • No matter what type of due diligence investigation is required, Protiviti’s Investigations & Fraud Risk Management (IFRM) solution can tailor our approach to suit your exact needs. Whether your concerns relate to multiple subjects be they corporations, private entities or high-risk business intermediaries, the scope of our review typically offers three levels of scrutiny: Standard, Heightened and/or Enhanced. Protiviti’s global footprint and vast network of risk consultants and investigators can deliver the timely and incisive investigative details you need to make more informed business decisions resulting in lowered risk to your assets, personnel and reputation.
  11. 11. © 2013 Protiviti Inc.10 Investigative Due Diligence Key Features and Differentiators Breadth of Review • IFRM’s investigative insights and prowess can investigate a myriad of concerns and issues by examining deal details, external data, global and native language news, relationships covering: individuals, entities, legal and regulatory filings (federal and state civil and criminal), corporate registrations and citations on sanctions and watchlists, assets and licenses. Our records research is buttressed by a global network of human intelligence resources who are attuned to their local markets, regulatory, law enforcement, industry and media communities. Resources and Tools • IFRM teams are comprised of experienced investigators possessing credentials that include: CPAs, CFEs, JDs, CAMS and former law enforcement professionals. • Protiviti has access to financial databases, public records, litigation filings, existing corporate documentation and open-sourced and media records, as well as collateral material , personal interviews and on-site property reviews. Strategic Advisory • Team members have extensive experience designing and reengineering investigative programs within law enforcement agencies, regulatory bodies and corporations. Our team can assess investigative teams by performing in-depth examinations of written policies and procedures, software and case management systems, investigative tools, roles and responsibilities, lines of reporting and unit governance. Any aspect of the investigative unit that is deemed to be underperforming will be identified and remedial measures devised and implemented.
  12. 12. © 2013 Protiviti Inc.11 Forensic Accounting / Financial Crime Investigations Forensic Accounting is an investigative process that combines traditional accounting and auditing techniques and criminal investigative tools and practices undertaken for the purpose of conducting an investigation of suspected fraud, corruption or financial crime. Forensic accounting procedures are focused, intense and comprehensive and intended to answer specific questions and address suspicions that have been raised. Forensic accounting investigations, like most other categories of investigation, start based on one of two pieces of information. First, one or more people or commercial partners come under suspicion based upon an anomalous transaction, set of transactions, behaviors, anonymous tips or other source of information that links specific people with some type of improper conduct. Second, anomalies or spikes in financial performance lead management to conclude that something isn’t right and they request a blind investigation of root causes of the anomaly or spike. Those investigations tend to center on the people in positions of authority that have control over the part of the business with the perceived problem. Under either scenario, the investigation will likely entail a combination of traditional accounting procedures but more comprehensive, focused and intense than is possible in an audit. Since the answers aren’t always obtained from an analysis of the accounting and banking records, things like public record background investigations of suspects, counter-parties and control persons; witness and subject interviews; forensic data analysis; computer forensics and even surveillance, can be critically important to establish the facts and give appropriate focus to an investigation. Protiviti’s IFRM practice is built on the understanding that the investigation of financial crime often relies on multiple disciplines and skillsets sometimes spanning international borders. Protiviti’s IFRM practice is comprised of former FBI Special Agents, accountants, Certified Fraud Examiners, fraud risk experts and forensic data analysts, all with extensive experience investigating fraud and financial crime. Forensic Accounting
  13. 13. © 2013 Protiviti Inc.12 Forensic Accounting / Financial Crime Investigations Why Protiviti? Allegations of financial and ethical improprieties can dissipate a company’s resources, detract from its operational focus and impair its reputation. Protiviti’s IFRM team follows a methodology to resolve fraud allegations through an often complex fraud examination which may include the collection of evidence, data review and analytics, in- depth interviews, written reports and expert testimony, when applicable. Broad and precise analysis may encompass enterprise-wide processes and protocols such as accounting, internal controls and management. Protiviti has excellent working relationships with government and regulatory agencies. We understand the current rules and regulations affecting our client’s business operations and industries, as well as the rules of evidence and chain of custody requirements. Protiviti investigators and forensic accountants have wide-ranging experience working with outside and in-house counsel investigating financial crime, quantifying losses, tracing criminally derived assets and engaging with government investigators, prosecutors and regulatory agencies. Our unique combination of investigative, accounting, internal auditing, controls and technology expertise complements the skills and experience of our clients’ outside legal counsel and in-house compliance, audit and legal personnel. By collaborating with our clients, we are able to consistently deliver high quality results, assist them strategically and transfer our knowledge so that our clients can apply and sustain the lessons learned long after the investigation is concluded.
  14. 14. © 2013 Protiviti Inc.13 Anti-Corruption Advisory Companies and their legal counsel dealing with allegations of bribery and corruption are often confronted with two problems at the exact same time. Conducting the internal investigation and seeking to assess and remediate the anti-corruption program that may have contributed to the bribery and corruption to have gone undetected. In November 2012, the Criminal Division of the U.S. Department of Justice (DOJ) and the Enforcement Division of the U.S. Securities and Exchange Commission (SEC) jointly released “A Resource Guide to the U.S. Foreign Corrupt Practices Act (“the Guide”)”. The Guide provides perhaps its best and most useful information beginning on page 57 in the section titled, “Hallmarks of an Effective Compliance Program.” Often, it takes a negative experience such as allegations of bribery and corruption, to expose shortcomings in an ethics & compliance program. Protiviti has extensive experience assessing and remediating global anti- corruption programs. Protiviti professionals have extensive experience working collaboratively with global companies and their counsel to evaluate the policies, procedures, accounting controls, personnel, training, technology platforms and service providers that are a part of the anti-corruption program and viewing them through the lens of the 10 hallmarks of an effective compliance program. By doing so, we offer a glimpse into what the government’s own assessment of your program may look like and an opportunity to proactively address any aspect of the program that may be missing, incomplete or not working effectively before the Government comes to that conclusion. Since Protiviti IFRM professionals are experienced performing corruption investigations, we work seamlessly with the investigative team to ensure that the proposed changes to the program are well aligned with what the investigation has revealed about program shortcomings. The Challenge Fixing What’s Broken
  15. 15. © 2013 Protiviti Inc.14 Bribery and Corruption Investigations Working with Outside Counsel Bribery and corruption investigations require close coordination between the client company, outside counsel and the forensic accountants, technologists and investigators working in support of the investigation. Investigating allegations of bribery of foreign government officials requires a few things. An understanding of the attorney client privilege, information privacy and the rules of evidence. Deep forensic accounting and investigative capabilities. Facility with enabling technologies to support electronic discovery and forensic data analysis requirements. And the ability to draw on local resources for language, understanding of local accounting practices, cultural nuances, logistical support and limit the client’s travel expenses in the process. Investigations work best when clients, outside counsel and forensic accountants work as a cohesive team. Protiviti investigators and forensic accountants have many years of experience working at the direction of legal counsel and alongside clients and have a longstanding track record of successfully executing such investigations as part on an integrated team. The Challenge Better Results Through Collaboration
  16. 16. © 2013 Protiviti Inc.15 Fraud Risk Management Programmatically Addressing Fraud Protiviti Anti-Fraud experts assist organizations with building sustainable fraud risk assessment processes and developing anti-fraud programs and controls to meet fiduciary and regulatory responsibilities. We support organizations in their efforts to prevent and detect fraud risk at every level, from fraud risk governance and employee training to fraud audits and fraud monitoring programs. Our solutions include development, assessment and collaboration on:  Fraud Control Policy  Fraud Risk Committees  Anti-fraud Programs  Fraud Risk Assessment  Corruption and FCPA Risk Evaluation  Fraud Risk Awareness Programs  Fraud Prevention Controls  Fraud Detection Controls  Investigation and Response Protocols  Fraud Audits  Fraud Risk Monitoring
  17. 17. © 2013 Protiviti Inc.16 FIU / Corporate Investigations Advisory Many global organizations have teams of in-house investigators who conduct investigations of internal and external fraud or threats, theft of intellectual property, piracy and product counterfeiting, money laundering, workplace violence and a host of other internal and external threats. These units are critically important to an organization’s overall ability to detect, deter, investigate, remediate and report a wide range of crimes and other threats to the organization, its personnel, premises, assets and reputation. These units have such unique skillsets that internal auditors, legal and compliance personnel often do not fully understand their operations and may struggle as a result when called upon to audit or oversee their operations. Protiviti’s IFRM practice has experience evaluating in-house investigative units, their tools, written policies and procedures, personnel, roles and responsibilities and overall capabilities. Protiviti works with its clients to objectively assess in-house investigative units, and make suggestions to improve their overall approach, all with an eye toward optimizing their operations. We can also assist in implementing any remedial measures deemed necessary to improve any aspect of the unit’s performance needing attention. Optimizing In-House Investigative Teams
  18. 18. © 2013 Protiviti Inc.17 Contact Information Powerful Insights. Proven Delivery.® 1290 Avenue of the Americas 5th Floor, New York, NY – 10104 Direct: 212.603.8356 Mobile: 917.930.5903 Fax: 212.708.6408 Scott Moritz