Self Auditing Your Ethics Program
Rachel Muli
Regional Director, Internal Audit
UNITED TECHNOLOGIES
Overview
Annual revenue: $58.2 billion
− 16th largest U.S. manufacturer
− 44th largest U.S. corporation
− 112th largest company in the world
199,900 employees in approximately 4,000 locations globally
Headquartered in Hartford, CT
Core markets:
− Aerospace & Defense
− Residential, Commercial construction & Infrastructure
2
UNITED TECHNOLOGIES SALES
2011
Aircraft systems
F135 CTOL Engine
UH-60M
PurePower®
Engine
Electronic
Security
InfinityTM
Gen2®
Fire safety
Commercial
refrigeration
Includes discontinued operations
$58.2 billion
3
UNITED TECHNOLOGIES
Global compliance responsibilities
Legal Compliance
Enterprise Risk
Management
Oversight of
Business
Practices
Officers
Investigations
Standards
and Training
Program
Reviews
Audit
Committee
Oversight of
Ombudsman/DIALOG
4
UNITED TECHNOLOGIES
Business practice organization
BPO Headcount 2005 - 2011
BU Global & RBPO
Corp HQ BPO
FTE
500
450
400
350
BPO FTEs
No. Full/Part-Time
Time BPOs
LBPO
300
250
200
150
100
50
0
2005
2007
2009
2011
5
UNITED TECHNOLOGIES
Self auditing our global compliance programs
The purpose of our audits is to ensure awareness and adherence
to UTC’s global compliance programs
UTC’s self audits are performed by several different organizations
throughout UTC including:
- Human Resources
- Business Practices Officers
- Local management
- Internal Audit
- Global Compliance Department
6
UNITED TECHNOLOGIES
Self auditing our global compliance programs
Areas we examine include:
 Completion of annual certification
 Compliance with Ethics training requirements
 Oversight of Ombudsman / DIALOG programs
 Ethics related internal audits
7
UNITED TECHNOLOGIES
Code of Ethics
Code of Ethics
Code Supplements
UTC Financial
Manual
8
UNITED TECHNOLOGIES
Code of Ethics
All salaried employees must
complete the annual
certification which gives an
overview on the Code of
Ethics, Conflicts of Interest
and Improper Payments.
Human resources tracks to
ensure all employees
complete the survey
Business Practices Officers
follow up on questions
9
UNITED TECHNOLOGIES
Code of Ethics
During each Internal Audit, senior
management is asked:
1. Whether or not they have been made
aware of, asked to participate in, or
directed others to participate in, any
potential Code of Ethics violations
2. If they have any ethics concerns or are
aware of any activity that may be in
violation of the Code of Ethics
10
UNITED TECHNOLOGIES
Ethics training
Employees must complete on-line Ethics courses based on:
- Experience
- Job function
- Risk profile
Course completion is tracked electronically and reports are
monitored by local management, regional and global Business
Practices Officers
11
UNITED TECHNOLOGIES
Ombudsman / DIALOG
more complex issues, including those legal in nature transferred to Ombudsman
DIALOG submitted
to Central Clearinghouse
Writer receives
a written response
DIALOG received by Central
Clearinghouse
Central Clearinghouse
reviews response
DIALOG cleansed
to protect writer’s identity
Ombudsman
Issue
Management receives cleansed
DIALOG from Central
Clearinghouse
Direct contact with
Ombudsman
The Ombudsman / DIALOG investigations are monitored by the BPO’s
12
UNITED TECHNOLOGIES
Ombudsman / DIALOG
During each Internal Audit selected employees are asked:
1. Would you feel comfortable using the DIALOG or Ombudsman
programs if you had a question or concern and wanted to remain
confidential?
2. Would you feel comfortable raising issues up to company
management?
3. Do you know of any situation where there was retaliation against
you or someone reporting an allegation? If yes, what did you do?
4. Are you satisfied with the information provided by the company
about the DIALOG/Ombudsman program?
13
UNITED TECHNOLOGIES
Ombudsman / DIALOG
During each Internal Audit we look for Ethics communications to be
displayed and for availability of DIALOG forms
14
UNITED TECHNOLOGIES
Annual DII audit
Auditing the Ethics and Compliance Departments :
Methods to report suspected ethics violations
Investigation of suspected violations
Ethics instruction
Testing of DII survey results
Voluntary disclosure to USG
Management job descriptions and the code
15
UNITED TECHNOLOGIES
Business process audits – what are they?
Review of an entity’s compliance with specific Corporate policies
and laws
- Antitrust
- Improper Payments
- Environmental Health & Safety (EH&S)
Address specific laws not covered in our annual audits
Emphasize importance of compliance with Corporate policies and
laws
16
UNITED TECHNOLOGIES
Business process audits - Antitrust
Our work program includes interviewing a sample of
employees covering the following topics:
-Training and Communication
- Trade Associations
- Certifications
- Contact with Customers
- Bidding Procedures
- Market Data
17
UNITED TECHNOLOGIES
Business process audits – Improper Payments
Our work program includes reviewing the following:
Detailed examination of the vendor masterfile (VMF)
Suspicious Accounts Payable
- Vendors not included in VMF
- Round dollar amounts
- Keyword searches
Payments made on behalf of customers
- Trips
- Gifts
Donations
Payments to sales representatives or consultants
18
UNITED TECHNOLOGIES
Business process audits – EH&S
Our work program includes interviewing key EH&S personnel
to discuss:
Does the entity have all necessary permits? How do they
know they have the necessary permits?
Are all permits valid? How are they monitored?
Were all non-compliances reported?
19
UNITED TECHNOLOGIES
Business process audits - reporting
Any issues
identified through
a BPA are
immediately
reported to the
business unit’s
legal department
and are included
in the Internal
Audit Report
20
UNITED TECHNOLOGIES
Reporting tools
Globally we utilize standard :
- Databases
- Forms
- Reports
- Audit work programs
These tools along with management reviews help to ensure
consistency in our processes
21