Certified Compliance Officer - Presentation Slides

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2. Introduction To Compliance © www.asia-masters.com

3. Introduction To Compliance The word compliance is derived from the verb 'to comply', which means, 'to act in accordance with the rules'. In the context of financial services, it therefore refers to the need for those organizations that transact regulated activities to abide by the terms of the Financial Services and Markets Act 2000 (FSMA) and to act in accordance with the rules of the Financial Services Authority (FSA), the independent supervisory body established under the FSMA as the sole regulator of the financial services industry. © www.asia-masters.com

4. The rules cover nearly all sectors within the financial services industry, including banking, insurance, investment management and securities, and apply to a vast network of financial institutions, offering a multitude of financial services and products, who have to comply with them. Regulated companies normally have a compliance department, headed by a Compliance Officer, whose role is to develop policy and practices that ensure all obligations and regulations are adhered to, as well as ensuring that no conflicts of interest arise within the organization. This person is also responsible for maintaining the company's relationship with the FSA. © www.asia-masters.com

5. Some organizations also have to comply with the rules of other regulatory bodies. These include bodies that have had regulatory powers conferred on them by the FSA, such as the London Stock Exchange, in recognition of its role as a Recognized Investment Exchange, and other voluntary associations, for example, the General Insurance Standards Council, whose members agree to comply with a self-prescribed code of conduct. © www.asia-masters.com

6. Why Regulate? The primary reason all industries, from utilities to food and including financial services, are regulated, is to protect the consumer. In the financial services industry, regulation aims to address the potential problem of the knowledge gap between financial experts who sell products and less informed consumers who buy them. It is difficult for the average consumer to properly understand the financial position of those institutions in which they are considering investing, partly because the market is so complex, and partly because it requires, time, information, skill and experience to make the best decisions. Regulation aims to ensure that the advisor helping people make those decisions is doing so as effectively as possible and in the best interests of the consumer. © www.asia-masters.com

7. In addition, many financial products are of a long-term nature, which makes after-sales service an important consideration. “Conduct of Business” regulation (which covers the standards that financial advisers must adhere to when conducting business with their customers), protects customers by forcing firms to maintain service levels throughout the length of a contract. Financial services regulation also seeks to protect the industry against financial crime, as well as against a systemic failure of the economy, should one institution fail and cause a contagion effect, resulting in other failures. This is a concern that is particularly relevant for banks. © www.asia-masters.com

8. Regulation also works to minimize anti-competitive and monopolistic behavior, as, without it, the size of some well- established financial organizations could act as a barrier to entry for smaller organizations, with larger companies using economies of scale to stifle competition and restrict choice for the consumer, leading to high prices. It should be noted, however, that while regulation is in place to protect the consumer, firms pass on the costs of compliance to the consumer in the form of higher prices. © www.asia-masters.com

9. Compliance efforts should support a corporate culture that promotes prevention, detection, and resolution of instances of conduct not conforming with Federal and State Law or ethical and business practices. Introduction © www.asia-masters.com

10. This Corporation is committed to promoting strong business ethics, monitoring compliance with applicable rules, regulations, and law. Having a strong compliance program with solid internal quality control mechanisms assists this Corporation to maintain its commitment as a firm of integrity and assists to prevent unethical conduct. © www.asia-masters.com

11. Expectations for Corporate Compliance • Continually improving the quality of services and products provided as well as consistent environmental structure that encourages employees to report potential problems • Having procedures in place for prompt investigation of areas of concern. © www.asia-masters.com

12. Educational Objectives of this presentation • Describe the mission of a Corporate Compliance Program • Identify what is the Office of the Inspector General (OIG) and its focus • Identify potential areas of vulnerability • Identify how this Corporation looks to minimize Corporate Compliance risk © www.asia-masters.com

13. Educational Objectives of this presentation • List some of this Corporation’s responsibilities to its clients • Identify what the employee should do if they suspect violation of Federal Law or ethical business conduct. • Identify required elements of a compliance program and its input on personnel. © www.asia-masters.com

14. The OIG has expectations for home health and hospice agencies as well as third party billerr The OIG has identified the following seven critical elements of an effective compliance plan: 1 Written policies and procedures 2. Designation of a Corporate Compliance Officer 3. Ongoing education and training 4. Effective lines of communication © www.asia-masters.com

15. Expectations continued 5. Enforcement of Standards 6. Auditing and Monitoring 7. Investigation and corrective action © www.asia-masters.com

16. • Providing easy to understand explicit guidelines for Compliance for all employees to follow • Ensure that employees understand what is expected of them in the conduct of their job Identify the mission of Corporate Compliance? © www.asia-masters.com

17. • Ensure that objective quality standards are defined for each department. • Ensure that those quality standards are measurable and metrics are routinely deployed © www.asia-masters.com

18. The mission of the Corporate Compliance department continued  Ensure employees are using Compliance Standards in their daily work activity  Enhance corporate performance in basic business relationships  Ensure the business culture at the Corporation supports ethical, quality oriented and honorable conduct.  Develop and maintain trust in the healthcare community of firms using services and products of this Corporation. © www.asia-masters.com

19. In healthcare, sometimes there are gray areas that may need to be discussed • Provide a process for decision making when the business standards DO NOT provide a clear answer to an issue or dilemma. © www.asia-masters.com

20. How will the Corporate Compliance Mission be accomplished? © www.asia-masters.com

21. • By providing a written Standard of Conduct for distribution to all employees upon hiring • By training on Compliance Standards with Policies and Procedures to employees of the Corporation. © www.asia-masters.com

22. • By providing ease of access to the Corporate Compliance Officer • By providing a hotline to report areas of potential non-compliance © www.asia-masters.com

23.  By monitoring and enforcement through the Compliance Officer and Compliance Committee  By review and update of the Corporate Compliance Program annually and as needed  By participation of all levels of management in the Compliance program © www.asia-masters.com

24. Fostering a Culture of Accountability • Most organizations are not held back by a lack of creativity, innovation or a supply of good ideas. What hamstrings most businesses is the inability to translate all of those great ideas — into action — and then into positive results. In my view, this is a classic case of the "Knowing — Doing" gap. Many businesses know exactly what they need to do to differentiate their products/services in the marketplace and capture competitive advantage — yet most businesses struggle mightily in creating a culture of accountability and disciplined execution that can translate those strategies and plans into deliverable results. © www.asia-masters.com

25. • Which means, if your organization can increase its ability to execute effectively by fostering a strong culture of accountability — it could have an incredibly dramatic positive impact on your success! • That is why for the last five years I have been relentlessly focused on understanding what it takes to create a culture of accountability within an organization. My research and field projects indicate there are basically nine key steps to effective execution, but to me four of them stand out as absolutely critical. © www.asia-masters.com

26. 1. Vision + Values + Strategy. Do you have an extremely clear and exceedingly well-communicated vision for the future of your company, underpinned by a set of core values that dictate how your people will behave along the way — built on the foundation of a core strategy that spells out the intended outcomes you want to achieve? This is so fundamental to effective execution because it is impossible to hold people accountable to a direction they don't understand or a strategy they are not committed to. © www.asia-masters.com

27. 2. I hate process. I can't stand Excel spreadsheets. It irks me every time I have to fill out a report or turn in a form. However, I absolutely know in my heart of hearts that it is impossible to produce repeatable success - without processes and procedures. My advice: create processes only around the MOST important key drivers of your business's success. To me, that means identifying and deeply understanding the moments of truth for your business — those handful of critical customer interactions that must be delivered flawlessly each and every time in order to create highly engaged, satisfied and loyal customers — and then creating the necessary processes, procedures and systems to allow your employees to consistently exceed your customers expectations on your unique Moments Of Truth. © www.asia-masters.com

28. 3. Two of the most essential elements of a culture of accountability are measurement and transparency. It is one of my favorite business axioms of all time. People without access to information do not have to take accountability for their actions. In order to be able to hold your people fully accountable for their performance, it is essential that you create a dashboard of the MOST important numbers and measures that drive your business's success — and then make sure that everybody in your company understands those measures and sees them constantly. Post them on a giant whiteboard in the lunchroom, send out a daily or weekly e-mail to recap of the numbers, make it the screensaver on everybody's computer, talk about it in every single meeting. Here is the truth: what gets measured, tracked, over-communicated and rewarded/punished for gets done! © www.asia-masters.com

29. 4. Lastly, as I just stated above, reward success lavishly and deal decisively with mediocrity. When people do a superior job of holding themselves accountable and delivering on their promises it is vital that you give them genuine, honest and sincere praise and reward them for modeling the appropriate behavior. And by the way, when I say reward them lavishly I don't mean huge bonuses or giant cash rewards. I am saying be lavish in your praise and appreciation and then give them something that is meaningful to them as an individual. It could be money, it might be a Starbucks gift card, or a better parking spot, or some flex time, or a weekend pass to Disney World for their family... anything that will make that particular employee feel truly appreciated. © www.asia-masters.com

30. • Conversely, failing to deal directly and quickly with poor performance and lack of accountability sends the message to the rest of your organization that you were just kidding about excellence. It tells everyone else that it's absolutely fine to shirk your responsibilities, turn things in late, do shoddy work, miss deadlines... and no one is going to hold you accountable for it. Once you start tolerating mediocrity your organization becomes a magnet for mediocrity. • Although there are many other factors involved in building a high-accountability culture, I believe that if you focus intently on these four steps it will greatly improve the level of accountability, results and success in your business. © www.asia-masters.com

31. The Regulatory Environment and the Role of Regulators © www.asia-masters.com

32. Ingredients • Laws • Regulations • Implementing agencies (ie Customs, Sanitary Epidemiologic Service) • Laboratories • Salt industry representatives • Politicians and policy makers © www.asia-masters.com

33. LEGISLATION Mandates iodization Empowers MOH to set standards Defines lines of authority and investigative powers Provides for incentives and punishment for non-compliance Defines licensing or registration requirements Addresses packaging and labeling Corrects unfavorable tax (ie for iodate) © www.asia-masters.com

34. REGULATIONS Define implementation procedures Define standards Set iodine levels Specify storage requirements Define packaging and labeling requirements Require quality assurance and record keeping Establish import clearance procedures © www.asia-masters.com

35. Customs ? •Are the procedures for checking iodized salt at the border clear and realistic? •What sampling methods are defined? •How are discrepancies between certificate of conformity and customs results to be resolved? •How are rejected shipments managed? © www.asia-masters.com

36. Wholesale and retail inspection ? •Are the procedures for checking iodized salt at wholesale and retail levels clear and realistic? •Are resources sufficient to provide adequate sampling? •How are discrepancies between inspection results and stated iodine content to be resolved? •Are there procedures defining how rejected samples are to be managed? © www.asia-masters.com

37. Laboratory Issues ? •Do the regulations establish standards laboratories for salt analysis? •Are there procedures for using an external standards lab (for either all analyses or for confirmation)? •Are sample handling methods well defined (ie for use as evidence)? •Are the lines of authority for managing lab results clear? © www.asia-masters.com

38. Industry perspective ? •Are importers aware of, and in agreement with the existing laws and regulations? •Have importers had difficulty with either customs or producers regarding conformity? •Do industry representatives feel inspection and enforcement procedures are fair and effective? •Is industry concerned about regulatory provisions regarding incentives or dis- incentives for salt iodization ? © www.asia-masters.com

39. Standards Codex standards for food grade salt Packaging standards •Size •Material •Repackaging Labeling standards •Contents •Producer •Lot number •Expiration date •Government logo Storage requirements •Conditions •FIFO National standards for iodized salt © www.asia-masters.com

40. Other Issues • Conformity of laws and regulations for iodized salt, with other food laws • Synchronization of iodized salt regulations with regulations for other fortified products • Agreement on tax issues for products involving a public health benefit © www.asia-masters.com

41. Legal Obligations And Due Diligence The law of obligations is one branch of private law under the civil law legal system. It is the body of rules that organizes and regulates the rights and duties arising between individuals. The specific rights and duties are referred to as obligations, and this area of law deals with their creation, effects, and extinction. An obligation is a legal bond (vinculum iuris) by which one or more parties (obligates) are bound to act or refrain from acting. An obligation thus imposes on the obligor a duty to perform, and simultaneously creates a corresponding right to demand performance by the oblige to whom performance is to be tendered. Obligations may be civil, which are enforceable by action in a court of law, or natural, which imply moral duties but are unenforceable unless the obligor consents © www.asia-masters.com

42. Definition • Justinian first defines an obligation (obligatio) in his Institutions, Book 3, section 13 as "a legal bond, with which we are bound by necessity of performing some act according to the laws of our State." He further separates the law of obligations into contracts, delicts,quasi-contracts, and quasi-delicts. • Nowadays, obligation, as applied under civilian law, means a legal tie (vinculum iuris) by which one or more parties (obligants) are bound to perform or refrain from performing specified conduct (prestation). Thus an obligation encompasses both sides of the equation, both the obligor's duty to render prestation and the obligee's right to receive prestation. It differs from the common-law concept of obligation which only encompasses the duty aspect. © www.asia-masters.com

43. • Every obligation has four essential requisites otherwise known as the elements of obligation. They are: • the obligor: obligant duty-bound to fulfill the obligation; he who has a duty. • the obligee: obligant entitled to demand the fulfillment of the obligation; he who has a right. • the subject matter, the prestation: the performance to be tendered. • a legal bond, the vinculum juris: the cause that binds or connects the obligants to the prestation. © www.asia-masters.com

44. Classification • Source • Obligations arising out of the will of the parties are called voluntary, and those imposed by operation of law are called involuntary. Sometimes these are called conventional and obediential. The events giving rise to obligations may be further distinguished into specified categories. • voluntary: – unilateral promise (pollicitatio) - undertaking by promisor only to perform, not requiring the agreement of the beneficiary – contract – quasi-contract • negotiorum gestio - duty to repay someone (gestor) who has managed the affairs or property of another who was unable • solution indebiti - undue payment or delivery of a thing to another, who is then obligated to return the thing © www.asia-masters.com

45. • involuntary: – delicts and quasi-delicts (equivalent to the common-law tort). – unjust enrichment (condictio indebiti) • Contracts • A contract can be broadly defined as an agreement that is enforceable at law. Gaius classified contracts into four categories which are: consensual contracts, verbal contracts, contracts re, contracts litteris. But this classification cannot cover all the contracts, such as pacts and innominate contracts. • Quasi-contracts • Quasi-contract is one of the four categories of obligation in Justinian's classification. The main cases are negotiorum gestio (conducting of another person's affairs without their authorisation), condictio indebiti (unjust enrichment) and common ownership. © www.asia-masters.com

46. Financial Crimes Financial crimes are crimes against property, involving the unlawful conversion of the ownership of property (belonging to one person) to one's own personal use and benefit. Financial crimes may involve fraud (cheque fraud, credit card fraud, mortgage fraud, medical fraud, corporate fraud, securities fraud (including insider trading), bank fraud, payment (point of sale) fraud, health care fraud); theft; scams or confidence tricks; tax evasion; bribery; embezzlement; identity theft; money laundering; and forgery and counterfeiting, including the production of Counterfeit money and consumer goods. © www.asia-masters.com

47. Financial crimes may involve additional criminal acts, such as computer crime, elder abuse, burglary, armed robbery, and even violent crime such as robbery or murder. Financial crimes may be carried out by individuals, corporations, or by organized crime groups. Victims may include individuals, corporations, governments, and entire economies. © www.asia-masters.com

48. Money Laundering For most countries, money laundering and terrorist financing raise significant issues with regard to prevention, detection and prosecution. Sophisticated techniques used to launder money and finance terrorism add to the complexity of these issues. Such sophisticated techniques may involve different types of financial institutions; multiple financial transactions; the use of intermediaries, such as financial advisers, accountants, shell corporations and other service providers; transfers to, through, and from different countries; and the use of different financial instruments and other kinds of value-storing assets. Money laundering is, however, a fundamentally simple concept. It is the process by which proceeds from a criminal activity are disguised to conceal their true origin. © www.asia-masters.com

49. • Basically, money laundering involves the proceeds of criminally derived property rather than the property itself. Money laundering can be defined in a number of ways, most countries subscribe to the definition adopted by the United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (1988) (Vienna Convention) and the United Nations Convention Against Transnational Organized Crime (2000) (Palermo Convention): • i. The conversion or transfer of property, knowing that such property is derived from any (drug trafficking) offense or offenses or from an act of participation in such offense or offenses, for the purpose of concealing or disguising the illicit origin of the property or of assisting any person who is involved in the commission of such an offense or offenses to evade the legal consequences of his actions; © www.asia-masters.com

50. ii. The concealment or disguise of the true nature, source, location, disposition, movement, rights with respect to, or ownership of property, knowing that such property is derived from an offense or offenses or from an act of participation in such an offense or offenses, and; • iii. The acquisition, possession or use of property, knowing at the time of receipt that such property was derived from an offense or offenses or from an act of Participation in such offense or offenses. © www.asia-masters.com

51. The Financial Action Task Force on Money Laundering (FATF), which is recognized as the international standard setter for Anti-money Laundering (AML) efforts, defines the term “money laundering” briefly as “the processing of criminal proceeds to disguise their illegal origin” in order to “legitimize” the ill-gotten gains of crime. © www.asia-masters.com

52. What is Corporate Governance? © www.asia-masters.com

53. Corporate Governance • Contemporary corporate governance started in 1992 with the Cadbury report in the UK • Cadbury was the result of several high profile company collapses • is concerned primarily with protecting weak and widely dispersed shareholders against self-interested Directors and managers © www.asia-masters.com

54. Corporate Governance Parties • Shareholders – those that own the company • Directors – Guardians of the Company’s assets for the Shareholders • Managers who use the Company’s assets © www.asia-masters.com

55. Corporate Governance • Primarily concerned with public listed companies i.e. those listed on a Stock Exchange • Focused on preventing corporate collapses such as Enron, Polly Peck and the Maxwell companies © www.asia-masters.com

56. Corporate Governance • What relevance does it have to Africa where there are few public listed companies • Most companies are non-listed, private family owned businesses where the shareholders and the managers are often the same people © www.asia-masters.com

57. Four Pillars of Corporate Governance • Accountability • Fairness • Transparency • Independence © www.asia-masters.com

58. Accountability • Ensure that management is accountable to the Board • Ensure that the Board is accountable to shareholders © www.asia-masters.com

59. Fairness • Protect Shareholders rights • Treat all shareholders including minorities, equitably • Provide effective redress for violations © www.asia-masters.com

60. Transparency Ensure timely, accurate disclosure on all material matters, including the financial situation, performance, ownership and corporate governance © www.asia-masters.com

61. Independence • Procedures and structures are in place so as to minimize, or avoid completely conflicts of interest • Independent Directors and Advisers i.e. free from the influence of others © www.asia-masters.com

62. Corporate Governance in Africa • In 1994, The King Report in South Africa also included within its Code of Corporate Governance requirements on sustainability and ethical standards • This was due to the context of a developing country and business ethics in Africa © www.asia-masters.com

63. Sustainability • No generally accepted definition • Most commonly used is from the Brundtland Report for the World Commission on Environment and Development 1987 which defines it as: © www.asia-masters.com

64. Sustainability ‘development that meets the needs of the present without compromising the ability of future generations to meet their own needs’ © www.asia-masters.com

65. Stakeholders • Sustainability recognizes stakeholder rights i.e. the rights of interested parties e.g. employees, the community, suppliers, customers etc. • Encourage co-operation between the company and its stakeholders in creating wealth, jobs and economic stability © www.asia-masters.com

66. Business Ethics • Established values and principles a company uses to inform and conduct its activities • Should permeate a company’s culture and drive its strategy, business goals, policies and activities • Usually found in a code of ethics © www.asia-masters.com

67. Elements of Corporate Governance • Good Board practices • Control Environment • Transparent disclosure • Well-defined shareholder rights • Board commitment © www.asia-masters.com

68. Good Board Practices • Clearly defined roles and authorities • Duties and responsibilities of Directors understood • Board is well structured • Appropriate composition and mix of skills © www.asia-masters.com

69. Good Board procedures • Appropriate Board procedures • Director Remuneration in line with best practice • Board self-evaluation and training conducted © www.asia-masters.com

70. Control Environment • Internal control procedures • Risk management framework present • Disaster recovery systems in place • Media management techniques in use © www.asia-masters.com

71. Control Environment • Business continuity procedures in place • Independent external auditor conducts audits • Independent audit committee established © www.asia-masters.com

72. Control Environment • Internal Audit Function • Management Information systems established • Compliance Function established © www.asia-masters.com

73. Transparent Disclosure • Financial Information disclosed • Non-Financial Information disclosed • Financials prepared according to International Financial Reporting Standards (IFRS) © www.asia-masters.com

74. Transparent Disclosure • Companies Registry filings up to date • High-Quality annual report published • Web-based disclosure © www.asia-masters.com

75. Well-Defined Shareholder Rights • Minority shareholder rights formalised • Well-organised shareholder meetings conducted • Policy on related party transactions © www.asia-masters.com

76. Well-Defined Shareholder Rights • Policy on extraordinary transactions • Clearly defined and explicit dividend policy © www.asia-masters.com

77. Board Commitment • The Board discusses corporate governance issues and has created a corporate governance committee • The company has a corporate governance champion • A corporate governance improvement plan has been created • Appropriate resources are committed to corporate governance initiatives © www.asia-masters.com

78. Board Commitment • Policies and procedures have been formalized and distributed to relevant staff • A corporate governance code has been developed • A code of ethics has been developed • The company is recognized as a corporate governance leader © www.asia-masters.com

79. Other Entities • Corporate Governance applies to all types of organisations not just companies in the private sector but also in the not for profit and public sectors • Examples are NGOs, schools, hospitals, pension funds, state-owned enterprises © www.asia-masters.com

80. Country Perspective • Corporate Governance is by way of legislation or best practice Code • US adopted legislation in 2002 - Sarbanes Oxley Act • Most other developed and emerging market countries have adopted best practice Codes e.g. Combined Code in the UK, Cromme Code in Germany and the King II Code in South Africa © www.asia-masters.com

81. Country perspective - Codes • These Codes are voluntary and are enforced by shareholders • Most of them operate on a ‘comply or explain’ approach • The Media also play a part in highlighting good or bad practices © www.asia-masters.com

82. Country Perspective • Countries in Africa have tended to adopt a hybrid approach whereby they have followed the ‘comply and explain’ approach but have enshrined some of the principles in law to assist in enforceability • The reason is the weakness of the shareholder base and of the media © www.asia-masters.com

83. Why Corporate Governance? • Better access to external finance • Lower costs of capital – interest rates on loans • Improved company performance – sustainability • Higher firm valuation and share performance • Reduced risk of corporate crisis and scandals © www.asia-masters.com

84. Why Corporate Governance? In 2002, L Klapper and I Love from the World Bank found evidence that improving a company’s corporate governance has proportionately greater impact in countries with weak legal environments. They have suggested that companies can partially compensate for ineffective laws and enforcement by establishing good corporate governance at the company level and providing credible investor protection © www.asia-masters.com

86. WHY HAVE A COMPLIANCE PROGRAM? • Risk Minimization • Financial Risks & Operational Risks • Health & Safety Risks • Reputational Risks • Better Image, Improved Relationships, Greater Trust • Community • Sponsors and Regulators • External Pressures • Post-Enron Corporate Accountability Expectations • Sarbanes – Oxley • Interested Board Members • Governmental Expectations (e.g. DHHS OIG) • (Possibly) Reduced Fines and Penalties • Greater Efficiency and Improved Outcomes • Better trained workforce, better morale • Elimination of uncertainty and confusion about roles and responsibilities • Better quality research, operations • Identifying and addressing problems early • Reducing likelihood of government audits & investigations

87. WHY HAVE A COMPLIANCE PROGRAM? • From Steve Jung, Stanford’s Director of Internal Audit and Institutional Compliance (as reported in IIGR guide, referenced below) Consequences of Noncompliance • Fines, penalties, and legal fees • Media coverage and blemished reputation • Imposed compliance “settlements” • More regulatory and audit agency scrutiny • Management time and effort required to perform damage control • Management turnover • Lower faculty and staff morale • Increased bureaucracy and lower efficiency • Lingering effects ………. • Guilt by association: when one of us is tarred, we all wear the feathers © www.asia-masters.com

88. Example: COMPLIANCE AT HARVARD • De-centralized Organizational Structure • Central Structure • Harvard Corporation / Overseers • President, Provost • VP and General Counsel (OGC) • VP for Finance (Controller, OSP, RMAS) • VP for Administration (EH &S Facilities) • Ombuds Office • Schools/ Tubs (HMS, FAS, HSPH, etc) • HMS • SPA (Pre-award), ORSP ( IRB, IACUC), IBC/COMS, FOA • Office of Research Compliance (ORC) • HMS RCO Reports to • Dean of HMS through Dean for Faculty and Research Integrity • HU AVP for Research Administration

89. Example: COMPLIANCE AT HARVARD • HMS RCO works closely with • OSP/SPA Directors/Staff • RMAS & HU Senior Compliance Officer • Numerous Departments & Offices including ORSP, IBC,FOA, Academic Departments, BSAG, FIG • HMS Compliance Committees • Research Compliance Advisory Committee (Senior HU/HMS Leaders, AVP’s, Associate Deans) • Research Compliance Leadership Group (HMS Directors – Research Administrative, Finance, and Research Safety and Ethics) © www.asia-masters.com

90. A WORD ABOUT “COMPETING ORGANIZATIONAL MODELS” FOR UNIVERSITY COMPLIANCE PROGRAMS • CENTRALIZED CORDINATION/ DISTRIBUTED EXECUTION MODEL (e.g. U. Minn.) • Single University-Wide Compliance Officer • Partner with leaders and Compliance/Administrative Personnel in units and Colleges • HYBRID/DECENTRALIZED MODEL (e.g. Harvard) • Compliance Officers at School Level (Research) • HU-Wide Senior Compliance Officer in RMAS • Horizontal Relationship of School RCO’s with Central Audit/Compliance Personnel • Compliance Functions/Roles Sometimes Filled by Administrators w/ other duties and w/out “Compliance” in their titles • “Stealth” Model (e.g. Baylor) • Decentralized, without designated COs • Compliance Responsibilities assigned to various Deans, Directors , etc. • Stronger oversight role in OGC, Audit, etc. © www.asia-masters.com

91. Overview Issue: WHERE SHOULD THE “COMPLIANCE FUNCTION” BE LOCATED? • VP for Audit and Compliance? – How are the roles different ? • General Counsel? – If not, what is the role of counsel? • Risk Management? – Isn’t this more than insurance and traditional risk management? • Stand Alone? – How does this function interact with above offices? © www.asia-masters.com

92. Overview: WHAT ARE THE PURPOSES OF A COMPREHENSIVE UNIVERSITY COMPLIANCE PROGRAM? Example: UMN/OIC’s Mission Statement: To serve, safeguard, and promote ethical practices at the University of Minnesota by: • Identifying compliance risks and effective methods to mitigate those risks; • Improving delivery of compliance resources; • Educating and promoting awareness of ethical and legal standards of conduct through effective programs; and • Partnering with responsible University representatives to monitor compliance and to ensure that appropriate and effective corrective actions are taken where non-compliance is detected © www.asia-masters.com

93. WHAT ARE THE PURPOSES OF A MEDICAL SCHOOL RESEARCH COMPLIANCE PROGRAM? Example: HMS/ORC’s Mission Statement: To contribute to the advancement of research excellence at HMS by undertaking activities aimed at: • Ensuring full compliance with all applicable governmental and institutional requirements, and the implementation of appropriate best practices, related to the conduct, administration, and reporting of research; and • Fostering a culture of responsibility and stewardship that assures the proper use of sponsors’ grant funds; and • Protecting the institution, its faculty, staff, and students, as well as our research partners and collaborators, the human and animal subjects of our research, and the members of our local and global communities who benefit from and are affected by our research activities. © www.asia-masters.com

94. Implementing Ethics in the Workplace

95. The Seven Sentencing Guidelines 1. Having Standards 2. Assigned Responsibility - Adequate Resources 3. Due diligence in Hiring 4. Communications and Training 5. Monitoring, Auditing, Reporting 6. Promotion and Enforcement of Ethical Conduct 7. Reasonable Steps to Prevent Misconduct © www.asia-masters.com

96. The Challenge is Doing More with Less 1. Have a Plan - preferably a long range plan 2. Have support at the Top and an “Ethics Team” 3. Get an Ethics/Compliance Committee Chartered 4. Put in place a “Code of Conduct” 5. Get a Helpline Set Up 6. Communicate to Managers/Employees 7. Do Some Training - E-Mail,Web,Video, 8. Attend Other Meetings or Training Sessions 9. Give Leaders Ethics Messages to Send Out 10. Use the Company Website Extensively 11. Follow in the Wake of Critical Events 12. Regularly Report on Numbers, Issues to Mgt. © www.asia-masters.com

97. Every Company is Unique Leadership History Culture Policies Practices People Regulatory Environment © www.asia-masters.com

99. Gallup Research Based Findings During nearly forty years of research and tens of thousands of interviews, Gallup has determined the Seven Demands of Leadership. These are behaviors of individuals who are perceived as leaders within their organizations, communities and nations. © www.asia-masters.com

100. WHAT GREAT LEADERS DO MOST - the most commonly expressed demands VISIONING MENTORING CHALLENGING EXPERIENCES KNOWING SELF MAKING SENSE OF EXPERIENCES STABILIZING VALUES BUILD A CONSTITUENCY 7 D E M A N D S © www.asia-masters.com

101. Allocation of Time For Creating Alignment Typical Drafting & Redrafting Statements Identifying Core Values Creating Alignment Desired Identifying Core Values Creating Alignment Drafting & Redrafting Statements 0-5% 90-100% 0-5% 0-5%10-20% 80-90% © www.asia-masters.com

103. How to Manage Organizational Ethics? 1. Create a formal program w/resources 2. Put someone in charge of it • General Counsel • HR director • Internal auditor © www.asia-masters.com

104. Report to… • CEO • Board of Directors • Committee of the Board of Directors • Senior Executive © www.asia-masters.com

107. BCBSNE Compliance Organization Board of Directors Audit & Compliance Committee Corporate Compliance Officer (VP Level) Compliance Department (with dedicated Staff) Compliance Cross Functional Team Members © www.asia-masters.com

108. Responsibilities 1. Provide Guidance and Answer Questions  Create and Assist in Creating Policy & Procedure  Develop and Deliver Training  Foster Awareness & Encourage Ethical Behaviors 2. Respond to Auditors and Regulators 3. Respond to Complaints (Receive/Investigate/Document/Resolve) 4. Liaison with the Board of Directors  Listen  Report 5. Keep Current on and Facilitate Compliance with Laws and Regulations © www.asia-masters.com

110. What is communicated? Ethics Materials: Mission Values Code of conduct/ethics Policies Decision methods Your culture Ethics program: Who is the Ethics Officer? How to make contact? Senior Management Commitment to Ethics: Why organizational ethics matters? © www.asia-masters.com

111. Methods of Communication Evaluate current ethics communication lines – Formal and informal – downward, upward, and two way Clear, consistent, credible messages across communication lines © www.asia-masters.com

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