CORPORATE COMPLIANCE TRAINING FOR MANAGEMENT

THE COMPLIANCE OFFICE…

http://www.youtube.com/watch?v=BgTgMq5biu8

Click on the link above to play the video.

NOW ON A SERIOUS NOTE… A LITTLE ABOUT COMPLIANCE

• Compliance provides stability in funding.

• Compliance uncovers inadvertent errors which can be corrected before they create huge problems for the Agency.

• Compliance allows service to individuals because paybacks and penalties can impact the delivery of future services.

• Compliance leads to a better relationship with regulators and those who fund the Agency.

• Compliance helps ensure quality services to those we serve.

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REGULATIONS

Risk areas that must be addressed:

• Billings

• Payments

• Medical Necessity & Quality of Care

• Governance

• Mandatory Reporting

• Credentialing

• Others Identified by Provider

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EVERY AGENCY SHOULD HAVE A COMPLIANCE PLAN

http://www.youtube.com/watch?v=deN29g_d0xw

Click on the link above to play the video.

COMMUNITY SERVICES COMPLIANCE PLAN

“A Corporate Compliance plan is a system which

is designed to detect and prevent violations of

law, as well as the likelihood of unethical activity

by agency employees, volunteers, contractors,

officers and directors.”

FRAUD 101

Fraud, in all its forms, costs billions in damage

each year.

Fraud involves taking something from someone

else through deception or concealment.

Occupational frauds are those committed in

connection with the fraudster’s occupation.

NONPROFITS LEARN TO

DEAL WITH FRAUD Eight nonprofit organizations in the Western New York region reported funds were used inappropriately, or lost through fraudulent means,

according to a new online database published by the Washington Post in conjunction with a series of stories on misuse of funds.

The newspaper details how more than 1,000 nonprofits across the country have responded to a mandate implemented in 2008 in federal tax

filings that requires them to report diversion of assets outside of the organization’s intended charitable purpose.

Some organizations simply replied yes, without attaching the required explanation, while others detailed fraud, embezzlement and misuse of

funds by employees. In other cases, no malice was intended, and the organization simply had a loss for unintended reasons.

The organizations locally range in size from a small union group in West Seneca to a large provider of alcohol and chemical treatment services

in Niagara County.

Three of the agencies appear on Business First’s 2013 Million Dollar Nonprofits list, each with revenue over $1 million:

• Northpointe Council of Niagara Falls reported in 2010 it had internally discovered the theft of cash by a bookkeeper who was immediately

terminated.

• Baptist Life Association in Williamsville reported in 2008 a diversion of assets, but failed to include any detail about it anywhere in its tax

return.

• The Society of St. Vincent de Paul in Buffalo reported in 2008 a loss from theft of funds.

Mark Zirnheld, executive director at St. Vincent de Paul, told Business First his organization contacted the authorities immediately after it

discovered a bookkeeper had embezzled $360,000. The individual was later convicted and sentenced to time and probation, and continues to

make payments on a 10-year restitution schedule.

Though it was a difficult process, Zirnheld said he and his board agreed from the start to be as transparent as possible. Though donors and

constituents may not have been happy about the situation, they saw the agency took action immediately and implemented safeguards to

prevent future problems.

“We didn’t sweep it under the rug or try to hide it,” he said.

“In our case, it helped us refocus our internal controls and I think we’ve been able to rebound from it and our benefactors and donors can rest

easier. If they were concerned before, they know now when the money comes to us, it’s being used as they’re designating it to be used.”

“It’s allowed us to sharpen our controls,” Zirnheld said. “We’ve attracted some new blood to our board of directors, sharp people, so overall it

has been a positive to us.”

Fraud and embezzlement can and does happen at all kinds of businesses, both for-profit enterprises and nonprofits. The problem for nonprofits

is that some people mistakenly believe that everyone involved in a nonprofit is a compassionate person and wouldn’t possibly steal or misuse

funds.

“It doesn’t matter if you’re a business or a charity, you’re going to have a few bad apples,” he said. “It opened our eyes. It was an unfortunate

experience, but a positive one.”

Another five smaller organizations were included in the Washington Post database:

• The International Union United Auto Aerospace and Agricultural Workers in Williamsville reported in 2008 it experienced a loss of $600

related to tickets for a retiree picnic for which it was erroneously billed for 60 additional people. The membership voted to cover the expense.

• Crossroads Springs Africa Inc. of East Aurora reported a diversion in 2011, but did not include any explanation.

• United Union of Roofers Waterproofers and Allied Workers in West Seneca reported in 2008 a former officer diverted $9,263 in office and

auto expenses, but signed an agreement to make restitution.

• The Kenmore-Town of Tonawanda Meals on Wheels in 2008 reported fraud by its former executive director, who agreed to repay $31,569 to

the organization.

• The Town of Cheektowaga Employees Association reported a diversion in 2008, but did not include any explanation

Tracey Drury

Buffalo Business First Reporter

Business First

FRAUD OR MISTAKE?

Fraud or Mistake?

Picture a ruler if you will…

Time is unrelated to intent if a person is acting in a reckless or deliberate fashion. The timeframe doesn’t matter – what was done, was done

with disregard or with actual knowledge.

Inadvertent Action/Honest Mistakes

(Didn’t put a penny in that persons pocket)

Reckless Disregard

(There are policies and practices in place – they were not followed)

Deliberate Ignorance/Actual Knowledge

(Fraud – there is intent)

EXAMPLES OF OCCUPATIONAL FRAUD

Stealing money or inventory

Claiming for hours not worked

Filing fraudulent expense reports

Adding ghost employees to the payroll

Billing for services not rendered

TYPES OF FRAUD

Asset Misappropriation:

Schemes in which the employee steals or misuses an organization’s assets

Tampering with company checks

Overstating expenses

Falsifying time sheets

Using credit cards for personal use

TYPES OF FRAUD

Corruption: Schemes in which a fraudster

wrongfully uses his influence in a business

transaction for the purpose of obtaining a benefit for

himself or another person

Conflicts of interest

Illegal gratuities

Bribery

Bid Rigging

COMMON FRAUDS BY EMPLOYEES

Stealing cash or inventory

Misusing agency property

Falsifying service records

Falsifying timesheets

Padding Mileage

Falsifying Expense Reimbursements

WHAT CAUSES PEOPLE TO COMMIT FRAUD?

RATIONALIZATION

I was only “borrowing” the money and planned to repay it.

The company won’t even realize this amount is gone; it’s not that much.

My boss does it all the time.

I’ve been working with the company for 15 years. They owe it to me.

I’ll stop once I pay off my debts.

I deserved this after the way the company has treated me.

PRESSURE

A gambling or drug

habit

Personal debt or poor

credit

A significant financial

loss

Peer or family

pressure to succeed

OPPORTUNITY

Lack of supervision

Poor internal controls

Poor record keeping

Extreme trust in a single individual

Lack of disciplinary action for previous frauds

What is the most

common reason

employees commit

fraud?

MOTIVATION

Research indicates that the most common reason employees committed fraud had little to do with opportunity, but more with motivation—the more dissatisfied the employee, the more likely he or she was to engage in criminal behavior. One criminologist described the phenomenon as “wages in kind.” All of us have a sense of our own worth; if we believe we are not being fairly treated or adequately compensated, statistically we are at much higher risk of trying to balance the scales

OPPORTUNITY IS KEY

Fraud does not occur in isolation.

All crime is a combination of motive and

opportunity .

The opportunity to commit fraud is typically

addressed through internal controls—if the

proper checks and balances exist, it is more

difficult (though still not impossible) to defraud

an organization.

RED FLAGS OF FRAUD

Living beyond means

Financial difficulties

Serious addiction to

drugs, alcohol, or

gambling.

OTHER WARNING SIGNS OF FRAUD

An unwillingness to share duties

A refusal to take vacations

A close personal relationship with vendors or customers

Complaints about low pay

Family problems

Excessive pressure within the company

Rule breakers

KEEP YOUR EYES AND EARS OPEN!

The body of research into why “good” employees turn to

fraud can be distilled into at least two important

concepts.

Employees who feel unfairly treated sometimes

believe they can right the scales by committing

occupational fraud and abuse. Workplace conditions

are therefore a major risk factor in predicting fraud.

Also, employees faced with embarrassing financial

difficulties pose a significant problem.

Keeping your eyes and ears open for disgruntled or

financially strapped employees can mean all the

difference in detecting fraud.

Also remember if you discover fraud to call the Corporate

Compliance Hot line or officer.

GOT ETHICS?

WHAT IS ETHICS?

A systematic process of reflection in which issues of

what one morally ought to do are analyzed, decided

and evaluated through moral reasoning that

encompasses, but is not limited to, ethical principles

and theories. Ethics refers to standards of behavior

that tell us how human beings should act in the many

situations in which they find themselves – as friends,

parents, citizens, businesspeople, care professionals,

etc.

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.

WHAT IS ETHICS?

Ethically justifiable behavior . . . consists of

morally correct decisions and actions in which

the interests of the society as a whole take

precedence over the interests of people. We

are trying to do what is right, just and fair.

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.

THEFT

Outright theft is clearly not an ethical practice, but there are many small ways in which an employee can take something from an organization. Office supplies are individually inexpensive, but in an organization with 100 employees, if each takes a $2 pen home once a week, the organization will lose more than $10,000 a year. An ethical employee will leave office supplies at the office, avoid padding expense accounts, refrain from making personal long-distance calls on company accounts and use sick time only when truly ill.

RELATIONSHIPS

The way you treat fellow employees or customers is an ethical issue. If you promise a customer the moon when you know you can’t deliver, your customer will lose faith in both you and the organization. Blaming others for your mistakes leads to loss of trust and even outright hostility from coworkers. This is an area where the well-known Golden Rule is a good touchstone for ethical behavior. If you wouldn’t want someone to do it to you, don’t do it to them.

HONESTY

Much ethical behavior has to do with honesty. Stealing is obviously dishonest, but other kinds of dishonesty can be equally damaging. You might not want to tell your boss he has made a mistake, although you feel it will cost the company in the long run. After all, messengers often get shot down, even when the message is accurate. As another example, you might tell a coworker who is a potential rival that his idea is terrific, when you know or suspect that it has serious flaws, in hopes that he will lose out when promotions come around.

ACTING ETHICALLY

Ethics is a complex issue, especially when your own self-interest is involved. Ask yourself some tough questions about your motives. Would your decision cause someone an injury? How would you feel if you stood on the other side of the fence? Make it a habit to treat people with respect, keep promises and avoid decisions made solely for your personal gain. Apply the “newspaper test” – if you would feel comfortable having your decision published in the newspaper for the whole world to see, you are probably acting in an ethical manner.

WHAT IS ETHICS?

Ethics is the branch of study dealing with what is the proper course of action for people.

It answers the question, "What do I do?"

The workplace is the most common place for ethical issues. i.e.: Favoritism is an unethical practice that seems to

be prevalent in the workplace.

Sometimes our conscience sends us a signal. The uneasy feeling you get when you treat someone wrong is your conscience reminding you that your behavior maybe unethical.

Ethical behavior at work has as much to do with the bottom line as it does with squaring your conscience. Unethical behavior can cost the company money. In fact, unethical behavior can sink the company – the now-defunct Enron Corporation is a prime example of how unethical behavior at the highest level can result in the destruction of reputations and a company’s demise. Ethical behavior helps to protect a company’s assets and can make an organization a better place to work.

ETHICAL MISCONCEPTIONS

Some people believe that workplace ethics are tied to religion or theology. The goal of business ethics isn’t to change people’s spiritual ideals; instead it establishes a set of values that direct workplace and corporate activity.

Other misconceptions include the thought that only “bad” employees benefit from workplace ethics programs. In reality, the corporate landscape embodies a maze of moral gray areas, so employees at every level benefit from ethical direction.

HOW DOES ONE KNOW WHAT IS ETHICAL?

Most good or least harm or produces the

greatest balance of good over harm.

Protects and respects the moral rights of those

affected.

Treats all people equally.

Adds to the public good.

Consistent with virtues.

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IDENTIFYING DECISIONS THAT RAISE ETHICAL CONCERNS

Uncertainty about how to interpret or decide among values

An intuition that something is not right

An issue that keeps you up at night

A complaint about how someone is being treated

A substantive difference of opinion about the right course of action

The prospect of a harmful or inequitable outcome

The impulse to conceal information from others

Remember if someone comes to you regarding a situation, you need

to follow up seeing you are the supervisor, and if you don’t know how

to handle the situation then you need to seek guidance or assistance

from HR or upper management.

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Is this ethical behavior?

IMPACT ON ORGANIZATION – ETHICAL CULTURES

Mindfulness – Gut reaction or feeling of discomfort.

Voice – A public conversation so that ethical issues can

be explored.

Respect – Listening to others with generosity rather than

suspicion and valuing different views. Work on issues as

colleagues, not critics.

Tenacity – Not avoiding difficult discussions or problems.

Legacy – Understanding that what we do now makes a

difference in the future.

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PRACTICAL DECISION-MAKING FRAMEWORK FOR RESOLVING ETHICAL DILEMMAS.

If you find yourself questioning… Ask yourself the following six questions to help you think through the situation and clarify your position.

Why is this bothering me? Determine what the issue is.

Who else matters? Consider the stakeholders now and down the road.

Is it my responsibility? Figure out what your role is and the limits of your responsibility.

What is the ethical concern? For example, is it fairness? Promise keeping?

What do others think? Seek others’ opinions. Ask for help. Learn from, and respect, disagreement.

Am I being true to myself? This relates to the personal-character aspect of the decision. Does it match with your values and character?

ETHICS IS MORE

There can never be enough laws to

address every circumstance. We need

critical thinking and critical reasoning

to deal with ethical issues. Judgments

need to translate organizational

values into action.

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TONE AT THE TOP

http://www.youtube.com/watch?v=ZVBhcMPhGRY

Click on the link above to play the video.

LEADERSHIP IN ETHICS

Leaders affect the environment and culture in subtle ways; they

shape culture through:

1. What they pay attention to, measure and control.

2. How they react to critical incidents and organizational

crises.

3. How they allocate resources.

4. How they act as a role model, teach and coach.

5. How they reward and promote.

6. How they recruit and select.

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PITFALLS

Ethical leadership requires more than high

ideals and good intentions . . . Ethical

environments must be developed and

nurtured. We cannot turn a blind eye to

inappropriate behaviors . . . for any reason.

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PITFALLS

Failing to link performance incentives to

ethical practices

Overemphasizing compliance with legal

standards

Setting unrealistic expectations for

performance

Inappropriately blaming individuals

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AS AN ORGANIZATION

1. Demonstrate that ethics is a priority

- talk about ethics

- prove that it matters to each of us

- encourage discussion

2. Communicate clear expectations for ethical practice

- if unclear, make clear

- explain the underlying values

- anticipate barriers

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AS AN ORGANIZATION

3. Practice ethical decision making

- identify decisions that raise ethical concerns

- address those systematically

- explain decisions

4. Support the ethics program

- you are here, thank you

- be a champion for the program

- support your colleagues

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WE SHOULD NEVER SAY

“All that really matters is the bottom line.”

“What are the chances anyone will find out?”

“You’re naive – everyone does it.”

“I don’t care how you get it done.”

“By any means” or “No matter what.”

“ I expect 100 percent compliance.”

“Just do it.”

“I don’t want to hear why you can’t. I don’t

care HOW you get it done, just get it done.”

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ROLE MODELS FOR ETHICAL PRACTICE

Addresses inappropriate conduct

Professional, responsible

Respects others

Maintains composure

Honest, forthright and trustworthy

Treats everyone fairly

Follows through on promises

Exercises self control

Takes the high road

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AND THE OPPOSITE

Ignoring inappropriate conduct

Emotional outbursts

Displays of aggression

Hostile language

Personal attacks

Talking down to others

Berating in public

Dominating conversations

Speaking disrespectfully about others

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THE AGENCY REQUIRES

To Live the Agency Mission!

Professionalism

Role modeling appropriate behaviors

Proactively addressing unethical conduct

Being respectful of self and others

Remaining dedicated and loyal to the Agency and those it serves

Demonstrating support of the Agency’s philosophies and mission

Being trustworthy and credible

Being willing to admit when you are wrong

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THE AGENCY STRIVES TO HAVE VIRTUALLY EVERYONE

JUST DO IT! THIS IS HOW WE DO IT!

1. Appreciate that ethics is important

2. Recognize and discuss ethical concerns

3. Seek consultation on ethics when needed

4. Work to resolve ethical issues on a

systems level

5. See ethics as part of quality

6. Understand what is expected

7. Feel empowered to behave ethically

1. We work together to positively impact the

lives of others.

2. Demonstrate respect and professionalism

when interacting with each other.

3. Recognize when you lack the necessary skill

and seek advice and/or assistance.

4. Problem solve when concerns arise.

5. Be honest and proactive when mistakes

happen.

6. Proactively attain the information you need

to be the best.

7. Proactively help others, within and across

departments.

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IF YOU SUSPECT FRAUD, UNETHICAL BEHAVIOR YOU MUST REPORT!

You can contact the Corporate Compliance Officer in the following ways – reporting is required:

Contacting the Corporate Compliance Officer directly at 883-8888 box 174.

Leaving a message on the Corporate Compliance Hotline 883-8888 Box 707.

Forwarding a writing message to the Corporate Compliance Officer (V.P. of Program Support & Development) at 180 Oak.

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