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Five insights on cross-border internal corporate investigations
Managing the unique challenges of global investigations
Cross-border internal corporate investigations, as compared with their domestic counterparts, can pose several unique challenges—from language barriers to cultural differences. How can businesses carry out global investigations in a thorough and effective manner? Our report outlines five insights that help shed light on the key challenges.
Explore content
- The current landscape of global investigations
- Common challenges in cross-border internal corporate investigations
- Explore five insights on cross-border internal corporate investigations
- Keeping cross-border internal corporate investigations on track
- Get in touch
The current landscape of global investigations
Increased globalization and scrutiny from regulators outside the United States continue to focus on concern about fraud and corruption. Approximately 97 percent of respondents queried during a recent Association of Certified Fraud Examiners (ACFE) Global Fraud Conference anticipate an increase in cross-border internal corporate investigations in the coming years. This statistic indicates that fraud and corruption are issues that are likely here to stay.
The implications for global corporations are important, as Kyle Sheahan, partner at the international law firm of King & Spalding LLP, explains: “Multinational organizations must form a global view of any potential misconduct because enforcement authorities are working across borders to do exactly that.” When compared to their domestic counterparts, cross-border internal corporate investigations can present challenges. And the unpredictability of these inquiries makes it almost impossible to apply a one-size-fits-all approach.
When asked about the biggest challenges their organizations face in conducting effective cross-border internal corporate investigations, respondents at the ACFE conference indicated:
- Limited internal investigatory resources
- Differences in local language
- Business customs or culture
- Availability and accessibility of electronic data
Common challenges in cross-border internal corporate investigations
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Lack of well-defined scope
Cross-border internal corporate investigations will require additional time to make a full initial scope of the situation, as well as the initial key risks. Structure the global investigation with well-defined priorities, assignments, and deadlines.
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Lack of regular, ongoing reporting
Investigators need ways to keep stakeholders updated on progress. Establish regular, ongoing stakeholder updates—whether by email, phone, or in-person. Back these up with timely reporting of issues and unexpected constraints.
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Lack of team members with adequate skills
An investigation team should have skills that are specifically tailored for the situation at hand, and each cross-border team typically requires certain specialized skill sets. Assign clear roles and specific responsibilities, then support the team with effective and efficient communication channels.
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Lack of consideration of local requirements
No two countries are the same. Be mindful of local laws, particularly as they pertain to data privacy and state secrets. Local customs are important as well: A business practice that’s prohibited in the US may be widely accepted in another country.
Explore five insights on cross-border internal corporate investigations
When reports of misconduct do arise, the first instinct may be to spring into action quickly. But hasty and inadequate preparation can easily get in the way of progress. This is especially true with global investigations, where nuanced differences often exist from one country to another.
Instead, set aside time to carefully think through the approach in the form of a detailed investigative plan, which should include the initial tasks to carry out in response to allegations of fraud (for example, gather email records and expense reports of the individuals named in the allegations).
Since it’s hard to predict what will happen in an investigation—and many people are likely to be involved—the plan also should include well-designed protocols. Knowing how to proceed under different circumstances is important to help minimize confusion, duplication of effort, and a host of other inefficiencies that often arise when handling issues from country to country.
Another consideration to be aware of is the local language, business customs, and cultural differences. From a language perspective, companies may want to weigh the benefits of translating information into English for review against the possibility that certain local language nuances may be lost in translation.
Even with meticulous planning, the unexpected can (and almost always does) happen. That doesn’t mean the investigation will go off course; it does mean the investigation should have built-in flexibility and effective lines of communication so the team—and the investigative plan—can adapt to changing circumstances.
For example, as companies increase their reliance on data analytics throughout the investigation, they may be more likely to identify other patterns or anomalies of interest that may point to potentially improper activity beyond what was reported initially, potentially leading to new avenues for investigation.
Other surprises may arise during interviews. Sometimes they are as simple as learning about an internal control process, whereas others may point to additional wrongdoings. Either way, a skilled interviewer (with proper preparation) can bring out information that may not have been evident in the initial allegations or document review.
In a cross-border internal corporate investigation context, there may be increased importance on relying on interviewers with the familiarity of the local language and business customs (which may be more effective than solely relying on translators).
In a cross-border internal corporate investigation, finding the truth is one of the underlying objectives. That said, once the fieldwork is done, companies often turn their focus to reporting.
Depending on the nature of the investigation and the findings, there may be several stakeholders to whom the company may report results, each of whom will likely ask for different types of reports. Companies may alter the level of detail and format (written vs. verbal) depending on stakeholder needs and other considerations. This can be additionally complex with a global investigation, as different countries may also require different reports based on the nature of the matter.
The bottom line is that each stakeholder may be looking for something different from the investigation, and companies should consult early (both internally as well as with external legal counsel) to agree on the various reporting protocols and requirements so they are prepared in advance.
Once the results from an investigation are received, the next step is remediation. Remediation is more than simply terminating the bad actors from the organization; it also involves addressing the breakdown in internal controls that allowed the misconduct to occur.
Investigation teams will want to put a remediation action plan in place following an investigation, which can help demonstrate (to both internal and external stakeholders) the company’s priority of enhancing compliance and preventing similar incidents in the future. While it’s certainly important for companies to respond promptly in these situations, "getting it right" is perhaps more important. Investigation teams will want to draft a remediation plan that’s well-thought-out and includes detailed specific action steps, names of accountable and responsible owners, and key milestone dates to track progress and implementation.
Another important consideration is that the same faulty internal controls that led to the initial misconduct may exist in other areas of the company. Therefore, organizations may want to conduct some level of testing to assess whether a problem may exist elsewhere.
Lastly, companies can’t forget to follow up. Providing local in-country management with instructions for remediation is the first step, but if management doesn’t act on those instructions, the same types of issues may reappear. Organizations should leverage analytics and other monitoring tools (along with knowledge gained during the investigation) to identify indicators of potentially similar activity.
Keeping cross-border internal corporate investigations on track
There's no one-size-fits-all approach to global investigations. The actions required to make an investigation successful can vary depending on any number of factors, including the nature of the underlying allegations, the location of the alleged misconduct, and the type of organization itself.
Once investigations cross international borders, these nuances can multiply quickly. It’s critical that companies invest sufficient time and resources to fully understand, prepare for, and respond to these complexities in order to navigate their way to a successful outcome.
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Anthony Campanelli |
Kevin Corbett |
Ryan Colabello |
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