Doing the Internal Audit-Management Dance

A biotherapy firm's continuous controls monitoring program, which is essentially run by its internal audit team, is credited with creating numerous (though unquantifiable) benefits.

The other operating unit, Talecris Plasma Resources, consists of facilities that collect the plasma Talecris Biotherapeutics uses to produce its injectionable treatments. It was purchased in late 2006, when it was still “very young,” Tourney says. It had no ERP system and generally did not document its procurement of supplies with purchase orders. Further, it handled large amounts of cash used to pay plasma donors — as much as $2 million per week — which created significant fraud potential. Adding to the difficulty factor: the number of donor facilities has grown from just a handful three years ago to 69 today.

An important aspect of the procurement problem was that there was no structured process for recording where supplies were sent after being received at the loading dock. And because there were no purchase orders, there could be no “three-way match” between shipment packing lists, invoices, and what was authorized to be purchased. “They literally just paid whatever the invoice said without knowing if a different price had been negotiated, which left them vulnerable to dishonesty by vendors,” says Tourney.

These issues were cured by putting the plasma collection division on SAP — which was not accomplished until mid-2008 — and creating new documentation procedures. Then ACL was ready to begin monitoring the receiving process. The technology also detects purchases for which there are no purchase orders and tracks the reasons given for not using one. As a result, the number of purchases without purchase orders has dropped from 80% to 40% of the total.

Controls addressing the risk of fraud pertaining to the cash distributed to donors required a different approach. Talecris implemented procedures whereby third parties deposit cash into ATMs at the collection centers that dispense cash to donors. Thus, the employees never touch the cash. Then the company installed a donor-management system that allows headquarters to track incoming donors and allows the CCM system to monitor cash controls.

Taken together, the results of Talecris’s implementation of continuous controls monitoring were impressive, according to the Rutgers case study. “Talecris has seen enormous benefits as a result of this project,” the report said.

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