In today’s fast-paced business environment, the demand for efficient and accurate auditing processes is higher than ever. This is especially true in the life sciences industry, where maintaining compliance with regulations like the U.S. Sunshine Act and Anti-Kickback Statute (AKS) is paramount.
Expense management and auditing tools have evolved to meet this demand, with automated solutions like Concur Intelligent Audit emerging as game changers. In this blog, we’ll conduct a comparative analysis between Concur Intelligent Audit and traditional audit methods, focusing on their implications for U.S. life sciences companies. Additionally, we’ll explore the role of qordata, a specialized solution for life sciences compliance auditing.
Traditional Audit Methods: Challenges and Limitations
Traditional auditing methods have been the standard for decades. These audits typically involve manual checks and sample-based reviews of financial records, such as expense reports, travel reimbursements, and payments made to healthcare professionals (HCPs).
Some of the key limitations of traditional audits include:
1. Sample-Based Auditing: Limited Scope
Traditional audits often rely on reviewing only a sample of the total transactions. Auditors select a subset of records to review, using statistical or random sampling techniques to determine the sample size. While this method reduces the workload, it also introduces significant risks.
- Gaps in Coverage: Since only a fraction of transactions are reviewed, potential compliance violations, errors, or fraudulent activities in non-sampled transactions can go undetected. In industries like life sciences, where companies must track and disclose every financial interaction with HCPs to meet Sunshine Act requirements, this limited scope can result in serious compliance risks.
- Overlooking Anomalies: Sample-based auditing increases the likelihood of missing isolated instances of fraud or regulatory breaches. For instance, a single inappropriate payment to an HCP that wasn’t part of the audit sample could result in significant penalties if later discovered.
2. Time-Consuming and Labor-Intensive
Traditional audits are notoriously time-consuming. Each transaction in the sample requires manual verification, including reviewing receipts, invoices, and contracts, and ensuring that each expense complies with applicable regulations, such as the Sunshine Act or the Foreign Corrupt Practices Act (FCPA).
- Document Verification: Auditors must manually check every supporting document to verify expenses. This includes cross-referencing invoices, receipts, and travel itineraries against company policies and regulatory requirements. This labor-intensive process can take weeks or even months to complete, especially for companies handling a large volume of expense reports.
- Lengthy Audit Cycles: Since audits are performed manually, they tend to follow a cyclical pattern, often being conducted quarterly or annually. This periodic auditing schedule means that any issues or compliance violations that arise between audits may not be detected until much later, leaving the company exposed to prolonged periods of non-compliance.
3. Human Error and Subjectivity
Manual audits, by their nature, are prone to human error. Even the most experienced auditors can make mistakes, which can have far-reaching consequences for the organization.
- Misinterpretation of Data: Auditors may misinterpret the context of certain transactions, leading to incorrect conclusions. For example, a legitimate payment to an HCP may be flagged as suspicious due to a lack of documentation or misunderstanding of the purpose of the payment.
- False Positives and Negatives: Errors in judgment can result in either overlooking legitimate compliance violations (false negatives) or flagging innocuous transactions as non-compliant (false positives). Both scenarios can lead to inefficiencies: the former by allowing violations to persist and the latter by causing unnecessary investigations and disrupting normal business processes.
- Inconsistent Audits: Different auditors may apply different levels of scrutiny to the same set of transactions. This inconsistency can result in audits of varying quality and thoroughness, which can undermine the reliability of the audit process as a whole.
4. Limited Fraud Detection Capabilities
One of the most significant shortcomings of traditional audits is their limited ability to detect fraud, especially when it comes to identifying complex schemes or patterns of fraudulent activity.
- Delayed Fraud Detection: Since traditional audits are typically conducted long after the transactions have occurred, fraudulent activities may not be detected in time to prevent further damage. For example, an HCP may have been overpaid for services, but this might only come to light months later after the audit is complete.
- Inability to Identify Patterns: Traditional audits tend to focus on individual transactions rather than broader patterns. This means that recurring issues—such as systematically inflated expense claims or repeated small-scale violations—can go unnoticed. Fraud often involves subtle patterns of behavior, such as small but frequent overcharges, that traditional auditing methods may not be equipped to identify.
- Reactive Rather Than Proactive: Traditional auditing is a reactive process, addressing issues after they have occurred. Without real-time oversight, companies may be unable to stop fraudulent activities or compliance violations before they escalate.
Concur Intelligent Audit: Transforming the Auditing Landscape
Concur Intelligent Audit is a tool designed to streamline the auditing of expense reports by automating the review process. It analyzes submitted reports, flagging potential policy violations, fraud, or non-compliance. This reduces the need for time-consuming manual reviews and allows organizations to ensure compliance with internal policies and global regulations. The system continuously learns from historical data, improving its ability to detect duplicate receipts, inflated claims, and other red flags.
In addition to its automation features, the auditing tool integrates with the broader SAP Concur expense management platform, providing seamless data flow and a comprehensive view of organizational spending. It also supports customizable rules and alerts, allowing organizations to tailor audits to their specific compliance needs. For added assurance, the tool is backed by human auditors who review high-risk cases. By improving audit efficiency and accuracy, the solution helps organizations reduce the risk of expense report fraud and maintain compliance while controlling costs.
qordata: Tailoring Compliance Audits for Life Sciences
While Concur Intelligent Audit offers robust auditing solutions across various sectors, the life sciences industry faces unique regulatory requirements. This is where qordata’s EMA (Expense Monitoring and Auditing) solution comes into play, specifically designed to cater to life sciences companies.
Some features of EMA that make it a valuable tool for life sciences compliance include:
- 100% Audit Coverage for HCP Interactions: compliance teams can ensure that every single transaction related to HCPs is audited, maintaining complete transparency. This is crucial in ensuring compliance with the Sunshine Act, which mandates full disclosure of financial interactions with HCPs.
- Automated Compliance Monitoring: Deep integration with SAP Concur enables continuous monitoring and auditing of all expense reports related to HCPs. This helps companies adhere to strict federal and state regulations, mitigating risks associated with non-compliance.
- Fraud Detection Specific to HCP Engagements: qordata’s specialized fraud detection capabilities are tailored to catch fraudulent activities related to HCP engagements, such as unauthorized gifts or inflated travel expenses. This focus on life sciences compliance helps companies avoid costly penalties.
- Customized Audits for Regulatory Compliance: Life sciences companies must navigate a complex regulatory landscape. EMA’s customizable auditing features help companies stay ahead of changes in regulations, such as auditing Fair Market Value (FMV) payments or ensuring compliance with the FCPA and AKS.
Key Considerations When Implementing an Expense Monitoring and Auditing Solution
Implementing an expense monitoring and auditing solution is a critical step toward improving financial transparency, regulatory compliance, and operational efficiency. However, to ensure the solution delivers on its promise, several factors must be carefully considered during the implementation process. Here’s what to keep in mind:
- Alignment with Industry Regulations
- Customization for Business Needs
- Integration with Existing Systems
- Audit Coverage
- Automation and AI Capabilities
- Risk Mitigation
- Ease of Use and Training
- Scalability
- Cost and ROI Considerations
- Vendor Support and Updates
Comparative Analysis: Traditional Audits vs. Concur Intelligent Audit
How Concur Intelligent Audit and qordata Work Together
Concur Intelligent Audit ensures comprehensive, real-time auditing of expense reports, while qordata provides the life sciences-specific expertise needed to maintain compliance with HCP engagement regulations. This combination enables companies to not only meet their compliance obligations but also to do so efficiently and accurately.
Conclusion: A Paradigm Shift in Compliance Auditing
For U.S. life sciences companies, the stakes are high when it comes to compliance auditing. Violations of regulations such as the Sunshine Act and AKS can result in hefty fines and reputational damage. By leveraging Concur Intelligent Audit in combination with qordata, companies can streamline their audit processes, reduce the risk of fraud, and ensure full compliance with industry-specific regulations.
Adopting these automated solutions not only enhances the efficiency and accuracy of audits but also helps foster a culture of transparency and accountability within organizations. As the regulatory landscape continues to evolve, investing in these intelligent audit solutions will be crucial for maintaining compliance and protecting a company’s bottom line.