Doctor hiding money into his pocket. Corruption concept

How Much Fraud Do You Have?

Tom is an 18-year CFO for a large international corporation.

He said, “There’s simply no way our fraud losses are that big.”

He was referring to a recent published report by the Association of Certified Fraud Examiners claiming that losses equivalent to 5% of revenues were the norm. With global revenues of over $60 billion, in Tom’s case these losses would be $1.5 billion. I agreed with Tom, “You’re right. There’s no way. You would have been out of business long ago is that was the case.”

But now that I had his attention I pushed him by asking, “But what are your losses?” He had no idea.

I’ve had this same conversation with hundreds of client leaders. So far, only two organizations have been able to give me an answer that was based on their own internal analysis of losses. In both of those organizations, losses were in the Doctor hiding money into his pocket. Corruption conceptrange of one to two percent of revenues. And in both cases, we put into place a campaign to cut those losses in half in 18 months.

What are you losing to misconduct, wrongdoing and outright fraud?

In 25 years of addressing this question with my consulting clients, we’ve never calculated an actual loss amount of less that than one percent of revenues. To be fair, these clients are all from fairly large to huge organizations. Smaller organizations often experience losses below this threshold due to their ability to better monitor transactions.

Let’s assume for a second that your losses parallel what I see in real life. To be conservative (and believable!) let’s assume that your losses are only one percent of your revenue stream. One percent of anything doesn’t sound like a lot. So let’s use dollar amounts instead.

• 1% of $10 billion is $100 million
• 1% of $50 billion is $500 million
• 1% of $1 billion in revenue is still $10 million in untracked losses

Now let’s face it. If you were an owner or other senior leader of a billion dollar company, and you saw someone driving away from your offices in a pick-up truck with $10 million in cash, you would drop everything you were doing and stop them.

But when the losses occur slowly in a clandestine manner over time each day, for some reason we don’t pay them much attention. Death by a thousand paper cuts is still death!

Here’s what to do.

• First, assume your losses are one percent of annual revenues.
• Second, make a quick list of the top seven or eight areas where these losses must be occurring to reach your one percent target. Include inventory shrink, contractor and vendor overcharges, P-Cards, expense reimbursement, Doctor hiding money into his pocket. Corruption conceptsales compensation and other financial incentives, and anything else that comes to mind. Don’t try to calculate amounts at this point. Just list the areas of potential loss.
• Third, meet with the leaders who oversee each of these areas and have a frank discussion about what they estimate their losses to be from any wrongdoing or theft. After all, they are the experts and should have a rough idea. Agree on a high and low range for each area of potential loss.
• Fourth, add these results together and see if they fall near the one percent of revenue amount. If not, keep digging.
• Last, put into place an Anti-Fraud Campaign that specifically targets these loss areas. Pledge to cut the losses in half in18 months. Remember, every single dollar you save goes straight to income.

If you’re having trouble getting started or simply can’t get others to accept that there are losses to address, let me know. I’ve helped hundreds of clients through this process and I can help you, too. No need to reinvent the wheel – it’s already available and ready to use. Just say the word and we’ll get started.

John J. Hall, CPA

John J. Hall, CPA

John J. Hall, CPA, is an author, speaker and results expert who presents around the world at conventions, corporate meetings and association events. Throughout his 35-year career as a business consultant, corporate executive and professional speaker, John has helped organizations and individuals achieve measurable results. He inspires audience members in corporations, not-for-profit organizations and professional associations to step up, take action and “do what you can.”

 

 

Swearing an oath with fingers crossed behind back concept for dishonesty or business fraud

Warning Signs of Corporate Fraud

We’ve seen time and time again how corporate fraud can cause devastation in it’s path, including well-publicized examples like Enron, Tyco and WorldCom. And even though many of these famous examples are long behind us, corporate fraud continues to be both common and harmful. Not only does it directly damage investors and employees, but it also has a domino effect on the financial markets and other organizations in the same industries as investors and lenders quickly and understandably lose faith.

Here are a few warning signs for you to monitor:

Late filings with the SEC. Public companies must warn the SEC if they plan on changing sales or earnings figures for a given quarter. Having this happen once or twice generally isn’t something that you need to worry about, but as Swearing an oath with fingers crossed behind back concept for dishonesty or business fraudsoon as it becomes a pattern, you need to take a closer look at the business’s books.

High additional compensation for executives. If executives are receiving an extraordinary amount of compensation beyond just their base salary, it could be an indicator of fraud risk. Corporate leaders are humans, and humans are naturally subject to the temptation of manipulating results to maximize potential rewards.

Significant periods of growth in earnings per share. Companies generally have ups and downs when it comes to their earnings per share. But it’s extremely unusual to have long, consecutive periods of growth. Legitimate, solid managed growth is a good thing; unbelievable growth in a declining market should be investigated more closely.

Other symptoms in financial reports. Large buildups of inventory, declining cash position, large increases in accounts receivable, unusually low depreciation costs, rapidly declining R&D expenses, and other similar trends are all cause for concern and may in fact be warning signs of wrongdoing and fraud.

In this day and age where manipulation of financial results remains far too common, it’s important to stay vigilant and monitor for red flags, symptoms and other indicators of aggressive accounting and outright deceit. Better to be overly suspicious than to be caught unaware.

John J. Hall, CPA

John J. Hall, CPA

John J. Hall, CPA, is an author, speaker and results expert who presents around the world at conventions, corporate meetings and association events. Throughout his 35-year career as a business consultant, corporate executive and professional speaker, John has helped organizations and individuals achieve measurable results. He inspires audience members in corporations, not-for-profit organizations and professional associations to step up, take action and “do what you can.”

 

 

Harnessing the Power of Probabilities

Some daily actions move us towards our goals. Other habits get in our way, block progress and undermine our efforts.

Maybe it’s because I’m an accountant by training, but it seems like it’s all a matter of simple math. When I take a positive step forward, I increase the Probability of a successful outcome. When I delay, fail to act, or do anything that blocks my progress, I decrease the Probability of a successful outcome.

The more positive actions we take each day, the closer we get to the goals we set. The more bad decisions we make and counterproductive habits we allow to drive our actions, the further from our goals we drift.

Simple math, based on harnessing the Power of Probabilities.

Here’s an example. If I want to get fit, I need to move my body in a way that builds and tones. I also need to make smart choices in what I consume for food and drink. The more I move and the better I consume, the more fit and healthy I am

goal setting

In large organizations, top performers are already on the right track. But at many as 70% of employees don’t contribute at their highest levels. Why? Many feel a lack of empowerment, and many don’t have a clear understanding of the organization’s vision or key goals. Even if these employees do understand the goals, most simply don’t know how their individual efforts support those goals. Do What You Can! keynotes and workshops specifically target the 70% while reinforcing the results already being achieved by top performers.

likely to become.

Likewise, when I take the simple step of writing out my action ‘To Do’ list each evening covering the next day’s activities, I increase the Probability of completing the important actions that I have decided will move me towards my goals. By working this list every day, I start each morning with what needs to be done and avoid much of the distracting and delaying stuff that eats up time and energy as I start my day. I enjoy crossing off actions as they are completed, and look forward to throwing out my completed To Do list when the last item is done.

I end my workday by writing out my list for the next day and then placing it right on top of my closed laptop where I am guaranteed to see it as the very first thing when I sit down to work in the morning.

Working this Simple Step each day increases the Probability of achieving my goals.

What Simple Steps could you take starting right now to increase your Probability of success? The more of these ideas you pile into your daily routine, the higher your Probability of Success.

Likewise, what daily routines and habits are getting in your way? Is it excessive text conversations with friends? Checking your email every five minutes just in case someone has reached out to you? Mindless use of social media? Plodding through your workday without structure? How about consistently failing to get enough sleep so that you always feel drained by mid-day? There are literally dozens of bad habits that we all engage in that decrease the Probability of achieving our goals on our terms.

Here’s an idea to get you harness the Power of Probabilities.

Pledge to spend one full day consciously noticing your actions that move you forward and the habits that get in your own way. Do a soft calculation of the effect each positive and negative action has on your own Probability of success. Making simple adjustments to your behavior based on the results of this exercise could help you adjust your action path and launch you towards more effective results.

Why not get started right now? Let me know if I can help.

 

John J. Hall, CPA

John J. Hall, CPA

John J. Hall, CPA, is an author, speaker and results expert who presents around the world at conventions, corporate meetings and association events. Throughout his 35-year career as a business consultant, corporate executive and professional speaker, John has helped organizations and individuals achieve measurable results. He inspires audience members in corporations, not-for-profit organizations and professional associations to step up, take action and “do what you can.”

 

 

sharpen your focus

Better! Results Idea #2: Focus

Session three of my coaching engagement with Jerry. He keeps bringing the discussion back to a very minor performance issue that he was working on at his job. As I glanced at the clock, I realized he had just consumed 20 minutes of our hour long meeting obsessing on just one minor symptom of his performance. There was no way we were going to have to for the really important stuff on the agenda: the core issues that could move the needle. As his business performance coach, I could see why his supervisors were so frustrated.

It doesn’t matter whether it’s our work or personal life. When we’re building on our strengths and fixing our weaknesses, we absolutely must target our efforts on what’s most important for our results. In short, we have to bring laser-like focus to what absolutely must be addressed to jump our results towards our goals.

Focus is critical for accelerated results.

There is a ton of useful guidance on this topic in a 1996 book by Al Reis titled Focus: The Future of Your Company Depends on It. To make his point, Reis uses hundreds of examples of brand-name companies who lost their focus by Focus: The Future of Your Company Depends on It.trying to be all things to all people rather than staying committed and dominating the one or two things they do absolutely the best. He creates a strong case for corporate and brand specialization. And he presents convincing examples of what happens to those who lose their focus. Many of these 1996 powerhouse organizations are no longer around.

While his primary message is directed at corporate leaders, it was an easy jump to take his findings and relate them to the performance of individuals like Jerry (and me!). Intense focus on what we do best speeds up our results; distracted focus by spreading our time and efforts to busywork and dozens of other diverse tasks slows us down and makes us a commodity in the workplace.

A human commodity can be easily replaced in the workplace. But a critical expert specialist?

Here are a few questions to sharpen your focus:

  1. Can you summarize what you do best in a short, clear, unforgettable statement?

Be factual, but bold in your statement. In my performance coaching and business consulting work, “I teach you how to get extraordinary results in six steps.” In the fraud prevention portion of my work, “I teach you and your employees Focus: The Future of Your Company Depends on It.how to prevent fraud.”

What’s your ‘branding statement’? Write it out right now. Then say it out loud to see how it feels.

  1. What do you do every day to increase your ability in your area of expertise?

Do you read, watch videos by other experts in your field, or take classes? How about this: do you actively practice your craft? Practice gets us ready for the moment when opportunity sits before us. Because we’ve run the drills in practice, muscle-memory will kick in and guide our efforts at critical moments.

  1. Do others know about your expertise?

Good work must be visible. You must make your expertise apparent to others without bragging about it. You do this through writing ‘how to’ articles on your specialty, speaking about your specialty in training classes, webinars and other education events, and by volunteering to help others who are learning your specialty as well. Don’t worry about them stealing the show; you’ll always be the wise expert leader that got them to their own level of expertise.

What’s your specialty? Do you bring ‘focus’ to your efforts? Are you working consciously every day to master this specialty?

Let me know what works for you.

John J. Hall, CPA

John J. Hall, CPA

John J. Hall, CPA, is an author, speaker and results expert who presents around the world at conventions, corporate meetings and association events. Throughout his 35-year career as a business consultant, corporate executive and professional speaker, John has helped organizations and individuals achieve measurable results. He inspires audience members in corporations, not-for-profit organizations and professional associations to step up, take action and “do what you can.”

Better! Results Idea #1: Eat Better!

Most humans have the intelligence, logic, resources and opportunity to pursue any result we choose. Both business and personal life goals are there in front of us. Granted some goals are easier to achieve than others, but all are available to shutterstock_225111118pursue.

Following the lead of other successful people, we should:

(1) Take time to think it through

(2) Visualize our objectives in clear and precise terms

(3) Write it all down in an organized action plan

(4) Work hard through sustained daily action

(5) Measure our results in a meaningful way

(6) Adjust our actions when realities bump up against our vision.

Following these six steps increases our Probability of Success however we’ve defined it. If you would like more information on this Six-Step System including how to create a tailored road map to

Take 6 simple steps for dramatic change – and extraordinary results! Are you poised for a change in your career, business, relationships, or health? You know that rah-rah approaches to self-improvement just don’t work – not for the long term. Are you ready for a proven system that works? The Do What You Can System meets you where you are. It guides and inspires you as you move through an easy, 6-step process. Follow The System, and you’ll achieve real results, both personally and professionally.

Take 6 simple steps for dramatic change –
and extraordinary results!
Are you poised for a change in your career, business, relationships, or health? You know that rah-rah approaches to self-improvement just don’t work – not for the long term. Are you ready for a proven system that works?
The Do What You Can System meets you where you are. It guides and inspires you as you move through an easy, 6-step process. Follow The System, and you’ll achieve real results, both personally and professionally.

pursue your own goals, follow the directions and exercises in my ‘how-to’ book “Do What You Can! Simple Steps—Extraordinary Results”

But there is one essential step needed in the pursuit of any worthy goal that must be stressed above all others. Simply, start by Eating Better!

What do we mean by Better!

Several years ago, I adopted the word “Better!” as my personal and business brand. In short, my clients and I are working to be:

Better tomorrow than today;

Better next week than this week;

Better next year than this year.

And so on into the future.

Better! Results come from Better! Choices at dozens of daily decision moments, followed immediately by Better! Actions in support of those choices.

But why should “Eating Better!” be number one on our action list? Great question, and here’s exactly why this idea is so important.

Daily pursuit of important life and business goals is both a mental and physical undertaking. Attention to the mental aspects of brainstorming, planning, writing and measuring consumes most of our limited time. As a result, busy motivated people like us are often reaching for whatever food is available at the moment hunger strikes. We’re so focused on our work, our deadlines, our results and the legitimate needs of others that we fail to take adequate care of ourselves.

For example, are we getting enough sleep to allow our brain and body to recharge after a taxing day? Are we drinking enough water to keep our brain and body operating properly? And just as important, are we providing our brain and our body the healthy food needed to sustain the long campaign pursuit of worthy goals often requires?

If you’re like me, you probably don’t need a life-coach to lay out a plan for getting one more hour of sleep each night or for doubling your daily water intake. But we may be in the same boat as we consider whether we have the knowledge, skills and discipline to Eat Better! every day.

So here are two specific suggestions to nudge you in the right direction right now.

  • The first is the recently published book by my wonderful bride Kris. Leave Cancer in the Dust: 50 Tips to Prevent Breast Cancer and Supercharge Your Lifeis as much about protecting our good health through daily attention to nutrition as it is about fighting off cancer. (It’s still amazing to me how those two ideas are so closely related!) You can find out more by visiting www.TheVailDiet.com. It’s a modest investment for well-researched, easy to follow guidance to make a huge difference and “supercharge your life”.
  • Second is a free resource I just became aware of today. It’s a food quality rating system from the Environmental Working Group. Click here for more details. Using this tool you get a 10-point quality rating score on 80,000 food products. It doesn’t cover everything I entered, but it covered a lot. I found it interesting to plug in a dozen or so of my favorite foods. I also found it scary to see how poorly a few of them were rated – especially when the sugar content was explained.

With these two resources and many others that are easily available to all of us with just a few clicks of our keyboards, we can arm ourselves with the information we need to make Better! Choices in what we eat.

Result? More energy, less toxicity, better fuel for our body and brains.

What tools do you use to make your food choices? Let me know.

 

John J. Hall, CPA

John J. Hall, CPA

John J. Hall, CPA, is an author, speaker and results expert who presents around the world at conventions, corporate meetings and association events. Throughout his 35-year career as a business consultant, corporate executive and professional speaker, John has helped organizations and individuals achieve measurable results. He inspires audience members in corporations, not-for-profit organizations and professional associations to step up, take action and “do what you can.”

 

 

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