FCPA Compliance Assessment as a Service for Fraud Examiners

Education2In today’s increasingly interconnected world, more and more companies involved in ever more business sectors are finding themselves employing a wider range of intermediaries and partners than they ever thought possible to manufacture, test, sell and market their products outside the U.S.  A small domestic start-up with a website and a few good products can find itself, almost overnight,  involved in an elevated level of interaction with foreign officials for approvals, permits, licenses and certifications.  Accompanying all this regulatory complication and unfamiliar interaction comes the heightened risk of becoming, wittingly or unwittingly,  involved in corruption.

As many of our Chapter members are aware from reading about recent, high profile cases like that of Wal-Mart Mexico, the U.S. Foreign Corruption Practices Act (FCPA) prohibits all U.S. companies, as well as their subsidiaries, from making or promising to make payments to foreign government officials.  The Act also requires companies to maintain accurate and reasonably detailed books and records pertaining to transactions and to dispositions of assets.  Assessing and reporting on our client’s FCPA compliance readiness is a real opportunity for fraud examiners since many company employed financial auditors (internal and external) lack adequate training to detect potential violations and few small or medium sized firms ever conduct standalone FCPA audits or risk assessments.

Fraud examiners can begin to address this need by making their clients doing overseas business aware that corporate lack of compliance with FCPA regulations  constitutes a substantial financial and reputational risk; since a lot of the work we currently do for companies is at the behest of corporate counsel, talking to counsel is often a good place to start.  Request permission to talk to the Chairman of the Audit Committee or to the CEO about adding some of  the following types of services to your annual fraud risk assessments:

–a broad risk assessment of the client’s current level of FCPA compliance targeted at identifying potential high risk areas featuring analysis of quantitative  and qualitative risk factors of all company businesses and international locations;

–assessing management’s FCPA knowledge and current compliance activities (if any); this service can be a very effective lead-in to the provision of management training since National ACFE can partner with you to provide both live and on-line management level instruction on this topic;

–testing existing company policies and procedures (both documented and simply cultural)  for FCPA awareness and effectiveness; this can be done by accumulating electronic data and conducting interviews with the staff overseeing international operations;

–advising management on the application of automated controls and proactive financial data anomaly detection tools to scan for patterns of irregular payments;

–testing transactions to determine whether FCPA controls are working as intended;

— reporting fraud assessment findings to compliance officers, audit committees and legal counsel in a format designed to enhance compliance and reward corrective action on identified FCPA related issues;

–driving FCPA policy and procedural changes using identified risks and gaps;

–training foreign employees about FCPA requirement compliance including on the red flags signaling possible compliance problems;

–sharing with client employees lessons learned from prior situations involving the FCPA.

The long term goal is to work toward making you,  the fraud examiner,  an equal partner  with the corporate compliance and legal functions on the FCPA compliance team; you can help clients design better policies and procedures, develop a more robust risk assessment framework and stronger controls and build your own practice while playing a vital role in the risk based approach to FCPA compliance.

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