Trigger, Detail, Summary: Making Key Compliance Indicators Work In Your Company
At the 14th PCC, which took place in Washington DC, last month, I had the opportunity to reiterate a priority for compliance professionals. It is a priority that needs to be better understood and better implemented.
Key Compliance Indicators (KCIs) are internal tools that prepare compliance/transparency professionals for better performance and reporting.
What You Need
To create KCIs for your company you need:
- Central data repositories with your company’s spend data—the more comprehensive, the better.
- Commercial data stores
- Study both datasets (a) and (b), and create alerts based on patterns that emerge from each.
- Consult business lines in the establishment of the indicator, by getting realistic feedback on thresholds, limits and reporting timelines.
The choice of what to monitor and how to monitor it is owned by compliance. Usually, the area of interest emerges from datasets, by identifying spending patterns. Anomalies emerge from historical data, which will tell you the expected direction of amount and frequency of payments.
Thresholds are another basic area which help define these indicators. Statutory limits can be a good benchmark for internal spend limits, for instance, as long as the ‘average’ amounts are frequently analyzed and monitored over a period.
Behavior that has resulted in punitive action (e.g. CIAs, fines, CMPs) are another area that can be built into your KCI construct. The key is to discovering the TOV event which led to the CMPs etc.
Once the KCIs are in place, you can conduct ‘real time’ monitoring, where KCIs are monitored in partnership with business units.
The team at qordata has worked with client organizations to identify some of the common triggers generated by KCIs. These include:
- Sudden spike/decrease in certain distributor sales by country or market/region
- Increased payments to high-risk vendors
- Increased T&E spend on HCP meals, “misc” expenses, or T&E exceptions thrown by the system such as missing receipt affidavits, meal limit violations etc
- Increase in new vendor or customer setups in a certain market
- Decrease in vendor payments with simultaneous increase in T&E or other payment methods for which data is available
- Increase in discounts, rebates to certain customers or free-of-charge product (e.g. $0 products on invoices)
How It Works
- You have created a system of Key Compliance Indicators—which is effectively a system to encourage your sales team to respect spend limits, and for marketing to gain results from within those limits. Once the system has been implemented, the Salesforce can self-check spend behavior against the threshold.
- If a threshold is violated, a trigger is generated. This is then escalated to all the concerned units. Details of the spend event are requested, and if the explanation is satisfactory, the summary is presented and the case closed.
- If the explanation (i.e. documented evidence) is not satisfactory, the spend event is escalated until corrective action has been taken.