Taking the Bait

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24 | Th e M Rep o RT Feature Upon completion of the audit, an exit conference is conducted to share any findings, risk rank those findings based on a severity matrix, and agree upon remediation activities and time- lines. This also is an opportunity for the vendor to respond to any misinformation and agree upon the formal execution of a CAP, or corrective action plan. Progress on the CAP is moni- tored monthly and evidence is provided to close out action items once completed. To ensure compliance, many in the field services industry have invested heavily in resources to manage their organizational risk as a supplier. From new technology and the expansion of in-house internal audit and compliance teams, a strong partnership of collaboration with clients is formed to proactively and aggressively manage risk and to ensure the frameworks are in place to maintain regulatory compliance and fully protect the consumer. Enhanced Focus on the Supply Chain A s third-party oversight and compliance has become more formalized, it should be seen as an opportunity to expand activities focused on the compliance and quality frame- works of third-party provid- ers. While many field services companies have implemented robust administrative compli- ance and verification activities when onboarding vendors in the past, much like the financial ser- vices industry, some have taken the process to the next level by including onsite vendor audits at their headquarters as part of the overall audit. So what are some best prac- tices to consider when designing a framework for establishing the nature, timing, and extent of audit procedures? First, perform a high-level risk assessment or tier- ranking activity across all service lines to place vendors into risk categories. The purpose of the as- sessment is to group vendors into "risk" tiers to determine the audit frequency as well as to properly schedule and execute on a plan. To facilitate an audit program, contracting with a national independent audit firm is highly suggested. The company's sub- ject matter experts can work hand-in-hand with the firm to create the audit plan, scope, and program. The scope can include compliance issues, administrative oversight activities, control frame- works, and substantive testing of work orders and human resource practices. The following includes a brief overview of the focused audit and control objectives. Internal fIle revIew—Vendor files are inclusive of verification of proper insurance; required acknowledgements are executed by applicable vendor personnel; evidence of required background checks are available; confidential- ity agreements protecting client data have been executed; and diversity certifications are present if applicable. BusIness process walk- throughs—Auditors perform a general walkthrough of the orga- nization's controls surrounding the applicable business processes they perform. Gaps are discussed and best practice discussions are offered to improve the capacity of the organization. work order testIng— Substantive testing focused on key criteria is conducted on a representative sample of vendor work orders. lIcense affIrmatIons—File re- views are conducted to validate that the organization maintains the proper licensing as required by its jurisdictions and applicable professions. QualIty control frame- work—A review is conducted of the organization's quality control processes and procedures. Evidence is noted for the nature, timing, extent, and tools utilized to formalize its quality program. Similar to the client audits we undergo, an exit conference is conducted to share any findings, risk rank them based on a sever- ity matrix, and agree upon reme- diation activities and timelines. A formal CAP is executed and progress is monitored monthly. Compliance Frameworks and Executive Ownership As should be evident by the increased investment in third-party oversight, execu- tive involvement in compliance activities must be focused and committed. It is a dynamic envi- ronment we are operating in and having appropriate frameworks in place to be agile, to efficiently identify risks, and to make pro- cedural adjustments and resource investment is critical. Anticipating client needs, implementing best practices to minimize their risk, and creating comprehensive frameworks to ensure transparent communication protocols are in place from the operational departments to the boardroom should be a priority in any organization. To proactively identify and mitigate risk in operations and vendor network, and create an environment of continual process and procedure improvement, a nimble governance structure is recommended. While there are varied ways organizations can accomplish these objectives, a streamlined committee approach consisting of a cross section of executive and service-line leadership will enable companies to ensure consistency and transparency of duties for their clients. Compliance Committee T he purpose of the Compli- ance Committee is to en- sure compliance and ethical be- havior within the organization by defining responsibilities and ownership, increasing awareness of compliance requirements, and providing a mechanism for iden- tifying and responding to new requirements and noncompli- ance with existing requirements. The committee has general oversight responsibility for com- pliance programs, policies, and procedures. The purpose of the commit- tee is to oversee the company's implementation of compliance programs, policies, and proce- dures that are designed to be responsive to the various compli- ance and regulatory risks; assist the organization in fulfilling its A streamlined committee approach consisting of a cross section of executive and service-line leadership will enable companies to ensure consistency and transparency of duties for their clients.

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