Effective%20Auditing%20

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Effective Auditing Monitoring Across
Multi-Country operationsNieves
ListeForensic Audit DirectorCovidien

• First International Medical Device Compliance
• Congress and Best Practices Forum
• Paris, 26-27 May 2008

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Agenda

• Speaker Profile
• Covidien at a Glance
• Overview of Covidien Compliance Program
• Auditing Monitoring
• Challenges for the future

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Speaker Profile

• BBA MBA Degree from ESADE, Spain
• 2 years in public accounting (Arthur Andersen)
• 8 years in Tyco International in Internal Audit,
  Mergers Acquisitions and Forensic Audit
• 15 years in Covidien as Director of Forensic
  Audit
• CFE certified

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Covidien at a glance

• Spin off from Tyco June 29, 2007
• Revenue of 9 billion
• A global healthcare products company
• Over 42,000 employees worldwide in 57 countries
• Products sold in over 130 countries
• 43 of sales from outside the US
• 61 manufacturing sites worldwide
• Sales Marketing
• Direct sales force in over 50 countries
• Third party distributors
• 23 distribution centres around the world

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2007 Net Sales by Business Segment
Medical Supplies 0.9B
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Pharmaceutical Products 0.9B
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10
10
59
13
68
Medical Devices 6.0B
Imaging Solutions 1.1B
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Covidien January 22, 2019
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Medical Devices Overview
2007 Sales by Product Group
Other
Clinical Care
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• 2007 Net Sales 6.0B
• Strong franchises, market
• leadership positions and a highly
• diversified product portfolio
• No single product accounts for
• more than 1 of sales
• Channels Primarily hospitals, with
• an increasing presence among
• alternate site healthcare providers

Endomechanical
SharpSafety
Vascular Devices
Soft Tissue Repair
Airway Ventilation
Oximetry Monitoring
Energy Devices
Covidien January 22, 2019
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Imaging Solutions Overview
2007 Sales by Product Group

• 2007 Net Sales 1.1B
• Products contrast media,
• delivery systems and
• radiopharmaceuticals
• across multiple modalities
• (x-ray, MRI and nuclear
• medicine).
• Purpose To help diagnose
• disease as early as possible.

Radiopharmaceuticals
Contrast Products
Covidien January 22, 2019
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Pharmaceutical Products Overview
2007 Sales by Product Group
Dosage Pharmaceuticals

• 2007 Net Sales 908MM
• Products Dosage
• Pharmaceuticals (branded and
• generic), Active
• Pharmaceutical Ingredients
• 10th largest pharmaceutical
• company in United States
• based on prescriptions
• dispensed.

Active Pharmaceutical Ingredients
Covidien January 22, 2019
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Medical Supplies Overview
2007 Sales by Product Group
Original Equipment Manufacturer

• 2007 Net Sales 887MM
• Leading provider of a broad
• range of high quality products
• used to improve patient care,
• including traditional wound care,
• incontinence, diagnostic and
• monitoring electrodes, operating
• room kits and accessories
• 1 or 2 market positions across
• core product categories

Nursing Care
Medical Surgical
Covidien January 22, 2019
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Strong Line-Up of Well Recognized Brands
Covidien January 22, 2019
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Overview of Covidien Compliance Program

• Written Standards
• The Covidien Guide to Business Conduct
• Covidien Comprehensive Compliance Program
• Proactive measures
• Fraud Risk Assessment
• Education Training
• Internal Lines of Communication
• Integrity Helpline
• Ombudsman Office
• Auditing Monitoring
• Reactive measures
• Investigate Past Potential Violations
• Corrective Action Procedures

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Education Training

• Mandatory online training modules
• FCPA Live training meetings with top management,
  sales trainees, sales and marketing employees and
  other personnel
• Fraud case studies
• Integrity Bulleting
• A recent initiative The Ethics Circle
• 10-15 work colleagues led by an integrity
  champion
• A monthly meeting of 1 hour to discuss business
  practices ethical compliance
• Provide training and understand employee issues
• Helps clarify polices and procedures

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Corporate Audit Organization

• Independent Corporate Audit Function
• Team of approximately 30 people
• Geographically and Functionally based
• Dedicated Forensic auditors
• Use of outside consultants

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Auditing Monitoring

• Audit scope and resources
• Customized audit programs to industry/geography
  risk
• Auditors trained on compliance and involved in
  investigations
• Third party due diligence questionnaires
• Categorize Red Flags

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Red Flags for third party agents and distributors

• High risk countries
• Refusal to represent or certify FCPA policy
• Statements that
• FCPA does not apply to them
• Anti-Bribery policies are too restrictive
• Requests for
• Excessive or unusually high compensation
• Large one-time success fees
• Marketing funds/slush funds
• Increase in compensation during sales campaign
• Payments to third countries or third parties
• Cash payments
• Lack of facilities or qualified staff
• Use of shell companies
• Negative reputation
• Refusal to
• Enter into an agreement
• Record a transaction properly in their books and
  records
• Close relationship to government officials

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How are issues raised?

• Complaint sources
• Integrity Line
• Direct call to Ombudsman
• Business
• Audit/Legal/HR
• Board of Directors

• Investigators
• Forensic Audit
• HR
• Legal
• Security
• Business

Ombudsman manages flow of complaints
Ombudsman reports to the Audit Committeean
objective facilitator
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Types of issues investigated

• Accounting irregularities
• Asset Misappropriation
• TE/Procurement fraud
• Breach of Internal Controls/Policies
• Conflict of interest
• Improper payments

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Cases per region
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Challenges of a Global Forensic Function

• Language
• Cultural differences
• Understanding FCPA laws and local laws
• Third parties
• Certain regions/countries

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My key learning
One size does not fit all Flexibility, open mind
and local expertise are key to success for
effective auditing monitoring across
multi-country operations.
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Questions