As for Corporate Governance and Compliance, RSM offers a new methodological approach focused on corporate process, which is based on both risk assessment procedure and on planning of Organisational Model 231. Such approach allows supporting the company throughout its activity, or supporting it during specific phases or needs. As for Compliance the main focus is planning and implementing organisational model ex. D.Lgs 231/2001, while the focus for Governance processes is supporting the activity for non performing loans, with reference to both creditors’ and debtors’ processes.
To face challenges, support changes and support businesses, we have identified a team of professionals with the best skills:
- Matteo Bignotti - is leader of RSM unit dealing with supporting processes for corporate Compliance and Governance. He has a juridical and organisational approach, but closely connected and integrated with other Partners’ expertise facing the same issues from different view points.
- Fabrizio Bulgarelli - Risk and Advisory Services Leader
- Giuseppe Farchione - Restructuring and Special Situations Leader
- Raffaele Mazzeo - Sustainability Services ESG Strategy Leader
- Luca Pulli - Business Design and Digital Transformation
Organisational Models 231
Adoption and implementation. The methodological approach of RSM
The Legal Decree 231 was published on June 19, 2001.
The prescription of the Organization, Management and Control Model contained therein has gone through alternate phases, going from being considered an unnecessary faculty, to being considered a highly recommended fulfillment with the main purpose of avoiding the cleaver of the Courts, which had too easy game extending administrative liability to entities for crimes committed by their top management and subordinates. Even today, after all this time, the Organizational Model is in most cases of its application considered as a necessary evil, a formal and expensive fulfillment, to be addressed in the most efficient way possible.
As a natural consequence, the methodological approach in the implementation and adoption of the Organizational Models has so far been based on purely legal assumptions that have given rise to risk assessment procedures focused on the crime, rather than on the corporate processes and the people.
The main deficiency of an organizational model based on the centrality of the crime is that it does not intercept the company processes in their entirety, effectively leaving many areas of contiguity between the mechanisms that supervise the corporate operation and the crimes that can be committed swing.
Practical result: to date few Organizational Models are able to demonstrate that the company has a complete and effective tool in the prevention and control of the commission of the crimes contained in catalog 231.
Recently, thanks to the push of a strongly ethical wave provoked by both the legislator and by various bodies responsible for checks and surveillance on various sectors of the economy, the vision of the norm has changed:
- Organizational models are seen not only as mere tools designed to prevent and control the commission of crimes by the managers of the various corporate functions, but also as tools for reviewing and rationalizing the operating mechanisms underlying the functioning of the entire organization;
- the adoption and implementation of the Organizational Models is no longer seen as a mere "regulatory obligation", but as a real organizational opportunity, or as an unmissable opportunity to analyze and, if necessary, redesign the entire operating system of the company machine.
A new methodological approach that has overturned the operating logic and that RSM has made its own: the starting point is no longer the crime, but the business process that assumes its natural role as a pivot around which the risk assessment procedure rotates and the design of the Model.
An approach that allows you to support the company in the complete path, or to provide support within each individual phase according to specific needs.
RSM makes use of multidisciplinary professionals: auditors, business professionals, process engineers, audit and risk management experts, compliance experts, lawyers and system consultants able to assist the risk assessment process using both traditional and innovative techniques such as gamification.
Planning and implementation process of organizational model according to RSM approach
RSM application methodology for planning and implementing 231 models is based on three counsequential modular processes, but functionally independent.
The first process is Risk Assessment, which aims to get to know and to depict the company, highlighting the most interesting organizational areas so as to plan and implement the model.
The second process is proper Model 231 Planning and Implementation.
Lastly, the third process is controlling and monitoring the model through checking its compliance as well as its information flows coming from control units.
Below is a synoptic diagram that correlates the various stages of the process and a description of the individual activities:
RISK ASSESSMENT activity
- General framework of the company: it aims at collecting information to obtain the design of corporate active and passive cycle. Detailed level with which process design is made clearly depends on the formalization degree of the corporate organization system.
- Staff assessment: it means finding managers and employees, with collection of information and documents (proxy, power of attorney, job description, indoor regulation, compliance, etc.) constantly monitored and updated by the model.
- Crime assessment: risk analysis of any crime by managers and employees according to D.Lgs 231/2001. The main objective of the analysis is assessment, with reference to medium/high risk violation, of existing control units and to compare them with those theoretically necessary to prevent and control criminal conduct.
- Action Plan: the control body receives a status quo notification as well as details of necessary activities for planning and implementing 231 Model. There are cases of such efficient auditing functions so as to require little intervention. Others require structuring processes and formalizing control system.
- Production of executable document: an execution plan is provided which can also be implemented “stand alone” following the guidelines it contains.
PLANNING AND IMPLEMENTATION activity of 231 Model
- Organizational setup: it means doing organizational activities emerging from GAP analysis – see point 2 of Risk Assessment. For example proxy auditing,of power of attorney and of job description. Or more simply the creation or abolition of functions, processes or process phases.
- Setup of control units: preventing and controlling some types of crime provides the implementation of control units compulsory according by law. For example safety at workplaces or environmental crime, laundering crime for financial brokers or data protection. Other types of crime instead need the creation of control units on a voluntary basis. For example corporate or tributary crime The objective of this activity is, according to Gap Analysis – see phase 3 of Risk Assessment – to implement the necessary systems to prevent and control any 231 crime .
- Setup of prevention tools: this is the activity with which we typically refer to ethical and procedural code. Moreover we plan and implement lifelong learning to the whole staff.
- The final result is Organizational Model 231. It is not just an interactive digital output, but also and especially a set of procedures aimed at preventing and controlling any crime according to D.Lgs 231 made by managers and employees.
Vigilance body has two main functions: receiving alter from special control units about any change in risk potential; monitoring the “continuos” compliance condition of the model.
- Monitoring on model update. It means periodically “passing around ” the risk assessment procedure to see if there is any organisational change, or provided for by the Law, imposing correction and/or update of the model.
- Monitoring of information flow. The control units are planned and implemented to provide special biannual (or quarterly if necessary) reports on the possible risk for crime and any action taken by institutions for crime control.
Non performing loans
RSM SUPPORT FOR SERVICERS OF UTP AND NON-PERFORMING LOANS PROCESSES
Italy has been one of the latest industrialized countries passing a law to regulate the disinvestment of NPE belonging to the banking system.
It was 1999 when Law 130 was approved (Securitization Law), setting specific rules for transferring and managing non-performing loans, guaranteeing investment protection, and segregation, in favour of the SPV’s bond holders. The first professionals operators in the sector started covering the roles provided for by the regulation:
- Originators (i.e. Credit transferor),
- Credit buyers, i.e. SPV,
- SPV’s Bond Holders,
- Servicers, i.e. Subjects controlled by authorities in charge of controlling SPV, i.e. Bank of Italy,
- Sub-servicers, or credits collectors.
Since then we have come a long way. A path that has gradually enriched with new figures both in the field of consultancy (such as "unsupervised" sub-servicers) and investors, with the mass appearance of investment funds. But above all, the range of target credits of interest has expanded.
In principle, the sector was mainly concerned with so-called non-performing loans: that is, all the assets claimed from debtors who are in a state of insolvency or in substantially comparable situations, regardless of any loss forecasts made by the creditor.
Recently, also thanks to the substantial changes introduced in 2019 to Law 130, the so-called unlikely to pay or UTPs, i.e. loans for which banks consider it unlikely that the debtor will fully fulfill his credit obligations, have become of particular interest. Usually these are loans from companies in difficulty which can also be reported as performing. Precisely the companies that, among other things, have suffered most from the negative effects of the economic restrictions imposed by Covid 19. Subjects still able, if adequately supported, not only to repay the debt, but to become excellent customers.
What and how does RSM propose itself in the processes of acquisition and management of UTP positions?
RSM puts its “many years’ experience” in auditing and/or administrative, fiscal, financial, legal and organizational consultancy, at the service of operators and consultants, to support them in the processes of acquisition and/or management of UTP credits whose collection is strictly dependent on the ability of the debtor to repay (and therefore to do business).
The processes that characterize the business cycle are two and they are sequential:
- An acquisition process, which lasts from 4 to 6 months, and which leads the investor from the moment of the expression of interest to the acquisition (in ownership or in service) of the debt positions.
- A collection process, which can last for years, and which leads from taking charge of the positions to the collection of credits. The execution times of this second phase sometimes determine the deterioration of positions that go from being UTPs to real bad debts.
RSM can support the operator / investor in both processes. Let's see.
The typical activities characterizing the first phase until acquisition are the following:
- The buyer expresses interest
- The originator gives a data/debtor “gross” stream file
- The buyer runs a first portfolio analysis and assessment
- The buyer releases a binding offer subjected to due diligence
- The originator gives data/debtors complete stream
- The buyer does a detailed analysis and assessment
- The buyer releases a definitive offer
In this first cycle of activities, RSM can support the investor in the meritorious analysis of debtors.
The process traditionally involves the supply of information held by the originator to the buyer in two tranches. A first supply of raw information stream and a second, more complete supply.
The first supply must usually be treated with tools that make it possible to enrich the data set with all the information present in the system (also information on the web). The goal is to provide an initial measurement of the debtor's state of health as well as his ability to be able to continuously manage the business. RSM offers its customers a new tool derived from years of experience in the risk assessment process for audit customers, capable of automatically processing big data available both on the free network and private database.
After this first activity, the Buyer is able to issue a first offer in order to be able to exclusively negotiate the purchase of credits and therefore be able to proceed with a more detailed due diligence. The originator then makes all the information available to the bidder available. Sometimes exhaustive, sometimes incomplete anyway.
RSM can support the investor in these further checks by the fine tuning of the analysis and assessments performed in the first investigation phase.
If the evaluations are positive and a definitive offer arises from them, the epilogue could be the acquisition of the owned portfolio, or under management with an outsourcer, or under in-house subservicing contract. In this second case, the organizational choice with which to manage the positions depends very much on the type of contractual continuation that the originator wants to entertain with the assigned debtors. In fact, we recall that, unlike non-performing loans, UTPs continue to enjoy the contractual relationship with the originator.
The typical activities of the UTP position management phase are:
- acquisition of the UTP portfolio, owned or managed
- start of the collaboration process with individual debtors
- in-house analysis and assessments of the debtor
- construction of the industrial and financial plan
- organizational and structural interventions
assistance in management processes
- execution and monitoring of the industrial and financial plan
In this second phase the support of RSM can be much more preponderant as it is mainly based on organizational interventions in the debtor's home or in favor of the debtor.
GIVING FOR GRANTED THE POTENTIAL SUPPORT OF RSM IN ALL ACTIVITIES WITH ACCOUNTING, FISCAL AND ADMINISTRATIVE CONTENT, THE INTENTION OF THIS PRESENTATION IS TO HIGHLIGHT THE SUPPORT OF RSM, IN THE INTEREST OF THE DEBTOR (AND CONSEQUENTLY ALSO OF THE BUYER), IN THE FOLLOWING ACTIVITIES:
Construction of the industrial plan and the consequent financial plan, useful for any debt restructuring and/or the simple scheduling of its collection.
Structural organizational interventions to design (or redesigning) the corporate functions of finance management, treasury and administration in general. In these cases RSM can also provide organizational support in the design of all Audit processes including the 231 organizational models.
Assistance to restructured processes. RSM can with its people assist debtors in the management of the aforementioned processes both in outsourcing and in-house.
Assistance in favor of the buyer in all monitoring activities of the corporate functions leading to the repayment of the debt and therefore in compliance with the industrial and financial plan.
FRAUD RISK INSIDE ORGANISATIONS: FRAUD RISK MANAGEMENT PROGRAM
- Governance of fraud risk
- The 5 principles for managing fraud risk
- Antifraud and anticorruption systems in the company: RSM Fraud Risk Management Program
- Corporate functions involved into the antifraud system
- Our antifraud and anticorruption services