FCPA Travel & Expense

Internal Investigations: Automated Transaction Monitoring & Analysis Key to Reducing Compliance Costs

on March 17, 2014

The cost impact of FCPA investigations is less related to fines and more related to internal investigations. These internal costs easily enter the tens of millions of dollars and can climb well into the hundreds of millions of dollars. As Richard Steinberg mentions in the recent Compliance Week story “FCPA Focus Will test the Compliance Function”, Kara Brockmeyer, the SEC’s FCPA unit chief, has outlined how companies can resolve investigations quickly. Her advice focuses on companies being proactive and voluntarily going to the SEC with the problem and the planned solution. Near the top of Brockmeyer’s list is to be proactive in handing over documents.

This is interesting since the document discovery process is generally the most expensive portion of the internal investigation. One of the greatest cost reducers for compliance teams on an ongoing basis is to implement automated transaction monitoring and analysis. For example, the largest global companies can implement automated monitoring of T&E systems on a monthly basis to identify:

  • the highest risk travelers
  • the highest risk merchants with whom these travelers are engaged
  • the highest risk markets where the travelers are going
  • details about the highest risk transactions related to these other entities

Given that corporate travel has the least controls related to expenditures, it can create some of the biggest headaches during an investigation and it can be the easiest disbursement function for rogue employees to exploit.

When leveraging an effective T&E monitoring and analysis system on a monthly basis, compliance teams can determine which travelers have the greatest need for additional training, which ones should be on a compliance watch list, and which should be subject to investigation. The team can work with internal audit and business operations to identify policies and controls that need to be modified in order to work better, which policies and controls should be added, and which ones may be obsolete. The best systems for performing this type of monitoring and analysis include audit trails that can be exported form the system into documents for delivery to auditors and investigators and they include integrated workflow to help manage the process of review and investigation. Best of all, these systems don’t break the bank, costing well under $100,000 per year even for all but the largest corporations.