Compliance, fraud detection, internal auditing, and a whistleblower hotline
Our comprehensive suite of internal audit services ensures full compliance and transparency for your Chinese investment, adhering to national laws and regulations, as well as our client’s internal policies. We also perform internal audits to investigate fraud cases, conduct health checks before important management changes, and so on.
Recognizing the critical role compliance plays in China, we work to proactively eliminate issues before they arise. This starts with the realization of your group policies in China. If you consider that your China operations are not a good fit for your specific internal control policies, then we will provide you with tailor-made internal regulations.
We also conduct annual reviews in order to assess the actual situation in your company. We often support multinational groups by seconding our senior professionals in their regular internal audits, or we can conduct the internal audit independently.
A final service is our whistleblower hotline. This hotline enables local colleagues to approach our firm in the event there is a suspected illegal matter at your subsidiary, whether in violation of national or local regulations, or because of noncompliance with internal policies. We are aware that not every issue will lead to a legal case: we carefully collect all the facts and discuss how to proceed in a careful and reasonable way.
References and success stories
An internal audit of a purchasing department following a whistleblower’s report
A whistleblower approached our client’s headquarters to report irregular behavior in the purchasing department. The information focused on the lack of a supplier selection process and close relationships with major suppliers.
We began by analyzing the information that the whistleblower provided in order to learn more about the operations of the subsidiary in China and the specific structure of the Chinese company, including the management, business scope, and major stakeholders. We then conducted an internal audit on site. We started with intensive interviews of the relevant employees and checked the financial accounts and documentation.
We came to the conclusion that major parts of the group’s internal policies were not being implemented in the Chinese company’s daily operations. This was due to a long-established relationship with the suppliers and a lack of awareness at the local management level. We also carried out a price comparison with help from the headquarters and learned that the prices were overall at arm’s length and there was no fraud. Following our internal audit, the internal purchase-price process was updated and the affected staff were trained through workshops.
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Dr. Gerald Neumann