• Don’t know what you don’t know• May be missing true risk areas• Lack of resources limits auditing reach

Meeting Increased Regulatory

Requirements

LimitedResources

Increasedresponsibilities

Need to showvalue to leadership

PITFALLS OF PERIODIC AUDITS

CHALLENGES FOR COMPLIANCE OFFICERS

617-559-0404

PM SYSTEMS INDUSTRY POISED FOR GROWTH

THE ROAD TO RISK-BASED AUDITING

MAKING THE MOVE TO RISK-BASED AUDITING

FROM RISK IDENTIFICATION TO RISK MANAGEMENT

Feedback toStakeholders Improvement

Identify RiskAreas

OngoingMonitoring

Periodic

• Time-based• Every provider• Random sampling• Dispersed resources• Periodic identification• Arbitrary detection• Uncovers discrete instances

Risk-Based

• Issue-based• High, moderate risk providers• Targeted sampling• Focused resources• Continuous monitoring• Early detection• Analyzes trends

PERIODIC AUDITS VS. RISK-BASED AUDITING

LEVERAGE REAL-TIME SOURCE DATA

• Direct data from yoursystem 835/837s

• Eliminates distortion ofdata

• Enables more effective,faster analysis

• Allows more relevantbenchmarking to peerorganizations

CLASSIFY PROVIDERS BY RISK

• High Risk: Series offailed routine auditsrequiring re-audits

• Moderate Risk:Multiple consecutivepassed audits withsome high-risk findings

• Low Risk: Multipleconsecutive passedaudits with no high-riskfindings

IDENTIFY RISK AREAS

• Use data mining tools• Highlight outliers• Use worksheets to

ensure standardizedaudit evaluation

GO LIVE!

• Plan, Do, Check, Act

EVALUATE THE STATE OF YOUR

CURRENT PROGRAM

• Resources• Providers• Approach

ANALYZE IMPACT/BENEFITS

OF RISK-BASED AUDIT STRATEGY

• Better utilization ofresources

• Improve chances ofuncovering problems

• Early detection & trendanalysis

DEVELOP YOUR PLAN

• Timeline withmilestones

• Software acquisition• Implementation• Conversion

GAIN LEADERSHIP BUY-IN

• Improve efficiency andproductivity

• Reduce risks• Better utilization of

resources

WWW.HAYESMANAGEMENT.COM

1 2 3 4

5 6 7 8

8 STEPS TO RISK-BASED AUDITING