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Signatures without thought

Fraud Prevention Tip #36: Approving Invoices – Good Questions to Ask

One of the most common and important management steps is the review and approval of invoices from suppliers, contractors and service providers. Yet few organizations provide meaningful training on how to review invoices. What to check, where to find the needed information, and what to do when something looks strange, odd or curious to the reviewer.

Here’s some suggested content for publishing an article for your employees covering what to think about at the moment of invoice approval.

Good Questions to Ask Before Approving Invoices

Each day, managers review and approve thousands of invoices. Too often that approval becomes a “rubber stamp” with little active thought about what the

Good Questions to Ask Before Approving Invoices

Fraud Issues & Answers for Managers and Key Control Employees

Organization leaders who are serious about managing the risks of wrongdoing, misconduct and fraud are waking up to the fact that most supervisors and employees simply lack the necessary skills. This ‘how to’ program fills in that gap – it shows participants exactly what to do to manage the fraud risks in their areas of responsibility. In this interactive workshop, executives, managers, supervisors and employees will learn the specific steps to take to prevent wrongdoing as part of their daily duties. And when prevention efforts occasionally fail, they’ll find issues faster and handle them more effectively.

approval step really means. “Signatures without thought” increase the likelihood of mistakes and make it easy for those who are trying to fool us.

Managers are encouraged to answer these basic questions before approving invoices and other payment documents.

1. How well do I know this vendor or contractor? Do I have first hand knowledge that they even exist!

2. Do I know that they actually provided the goods or services identified in the invoice or other billing statement?

3. Do I know that they are using the correct amounts for price (including unit prices used), sales tax, freight, and other variables that make up the amount invoiced?

4. On what basis do I know that the prices are reasonable in the first place? What standard have I used in determining that the price charged is fair?

5. How do I know that the quantities make sense? On what basis have we agreed to purchase the stated quantities?

6. How do I know that the invoice and other documents are mathematically correct?

7. Do I know that this invoice has not already been paid?

 

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.”

 

 

Adviser Leadership Management Director Responsibility

Fraud Prevention Tip #35: Write About Your Fraud Risks and Better Practices for Managing These Risks

One of the easiest (and least expensive!) ways to teach your employees about how to manage their fraud risks is to write about it. Short ‘how to’ articles published in organization electronic portals, websites and newsletters are the perfect place to provide direction.

These articles should all address one common theme:

How do I know?

Here are a several questions to go a few levels deeper:

  • How do I know what I’m about to sign is correct?

    Consulting Skills for Professional Auditors

    Consulting Skills for Professional Auditors

    The traditional definition of internal auditing is gone forever. In its place is the expectation that we will supplement our compliance, information verification and control testing responsibilities with value-based ideas for operational and technical improvement. This seminar shows participants how to add measurable value by moving from internal auditor to internal consultant on every audit project. Included will be suggestions on how to blend traditional auditor responsibilities with a more consultative approach. Participants will learn a foundation in the fundamentals and on the job application of Internal Consulting Skills in an auditing environment.

  • What should I be asking myself before approving this document?
  • What details should I check and how can I check them efficiently?
  • How should I react if something doesn’t look or feel right?

Using these and similar questions as your shell or outline, draft and publish one article each calendar quarter for a year or two. That gives readers time to digest the advice and apply it in their daily habits before moving on to the next risk area.

Start by addressing fraud risks that are common or systemic throughout the organization. Examples might include good questions to ask before approving:

  • Invoices from suppliers
  • Out of pocket travel or other cost reimbursement
  • Purchasing card transactions
  • Time sheets
  • Journal entries
  • Work orders
  • Wire transfer requests
  • New customer applications
  • Job candidate documents
  • Monthly or other periodic Applications for Payment from contractors
  • Other documents unique to the organization

Don’t get bogged down in long explanations of theory or governing regulations. Get to the point and provide use full direction. Use this test. If the employee or manager had a one-sided laminated checklist in front of them on their desks as they were reviewing this document, what would be on that checklist?

With their pen in their hand as they are about to approve the transaction, I doubt they would be seeking theory or regulations. They just want to know what to check before signing.

That’s the content of your article right there. No more, no less.

 

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.”

 

 

third party organizations

Fraud Prevention Tip #34: Tell Suppliers & Contractors How To Do Business With You

Healthy relationships with suppliers and contractors are critical to the success of pretty much every business organization. But blind reliance on these third parties can leave us exposed to many risks – including misconduct and fraud. Even highly ethical suppliers and contractors can see their integrity efforts undone by just one of their employees who handle your account. And if their employee colludes with your employee to commit fraud, all bets are off.

The best we can do is set the stage for success. We have to teach suppliers, contractors and any other third party organizations how to do business with us. Here are a few suggestions to get you on the right path.

1.Be crystal clear on required conduct. Make your Code of Conduct a key provision of all documents that spell out your relationship. It’s always nice if they have a Code, but make sure they certify compliance with your Code.

Supplier relationship management (SRM)

Managing Fraud Risks in Procurement and Contracting

All business entities have fraud risks. But exposures in procurement and contracting often top the list of what can go wrong. Among the many fraud risks that must be proactively managed is the possibility that third party suppliers and contractors will take unfair advantage of the relationship, entice employees into questionable practices, and commit wrongful acts or outright fraud. This program addresses the fraud risks inherent in procurement and contracting, and will present solutions for managers and auditors interested in guarding their organizations against the costs and other negative consequences of misconduct and fraud. Short on theory and long on practical ideas, the program will give participants the tools and techniques they need “on the job”. Case examples will highlight not only what can go wrong, but what participants can do about it in their own organizations.

2. Include Right to Audit language in documents covering all third party relationships. Not just contacts. Purchase orders, bids, and requests for quotations, engagement letters, leases, loans and any other deal document.

3. Finalize specifications before signing deals. It’s our job to be clear on what we’re buying, what we’re paying, and all other important procurement variables. Don’t leave it up to the other party to decide what you want or meant.

4. Once the relationship is underway, be involved. Monitor, check details, perform quality checks. Provide competent field verification where appropriate. Be organized and methodical in overseeing the results of third parties – especially service providers!

5. Zero tolerance for gaming behavior. If they act up, cut them off. Build in a legitimate ‘out’ to all third party deals in the event of wrongdoing or fraud. Zero tolerance is the only level that works. Period.

6. Perform or sponsor compliance audits. For construction, property management, technical services, advertising, IT services, outsourcing and many other areas where it’s difficult to determine whether we got what we paid for, send in the specialists. Your internal audit team is a great place to start. Otherwise, look outside for experts who specialize in the subject area, and arrange to get them in for what I like to call “Vendor Assurance Reviews”.

7. Be willing to say no and walk away. We need to feel a gut level of trust with our third party suppliers and consultants. If that confidence isn’t there, walk away. There’s always someone else out there that can step in and take their place.

Be explicit in defining your expectations of suppliers, contractors, consultants, business partners and all third parties. It’s our job to tell others how to do business with us. Don’t leave it up to them.

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.”

 

 

Managing 3rd Party Risks

Fraud Prevention Tip #33: Special Attention to Managing 3rd Party Risks

One fraud risk area of special concern comes from relationships with third parties. Here’s why.

Your organization’s relationship with employees is governed by law, policy, and operating procedures. There exists a daily ability to supervise, monitor, reward, and discipline individuals. Information needed for these tasks is available with few barriers. Employees generally share the organization’s ethical standards. Deviation in individual behavior from those standards is often detectable.

The organization’s relationship with third parties is determined by the documents governing the relationship. Examples include contracts, purchase orders,

Managing 3rd Party Risks

High Impact Auditing: Practices that Pay

Every day, the expectations placed on professional internal auditors are on the rise. As a result, we all find ourselves in a constant state of “catching up” in order to meet the needs of management, board members, clients and even ourselves. This highly interactive program will provide proven ideas that can dramatically increase the daily effectiveness and perceived value of the individual auditor and the audit team. Participants will learn how to:
Identify the key areas where management and other client groups want and need attention
Define your role to fully meet the needs of the organization
Identify the behavioral adjustments needed to be more effective every day
Improve audit planning and performance to identify and address areas of importance
Develop audit steps that find important problems and opportunities
Get desired action from auditees and others
Demonstrate measurable value

engagement letters, loans, leases, sales agreements, standard terms and conditions, and other documents. Third parties have legitimate business interests that may at times be at odds with those of their customers and clients. If wrongdoing by third parties is suspected, it may be difficult or impossible to obtain records needed to prove or disprove the suspicion.

Suspected fraud by outside organizations with a trust relationship can be extremely challenging to pursue. Be as prepared as possible for these challenges. Make sure that the documents that define the relationship are clear on matters of fraud and other wrongdoing.

Where appropriate, make your organization’s Code of Conduct an integral part of any third-party relationship documents. Consider having the third party acknowledge their awareness and compliance with your conduct standards every year.

Also include appropriate Right to Audit language in third party ‘deal documents’ – again, where appropriate to do so. We recommend strong Right to Audit language in:

• Requests for Proposals
• Contracts (including the requirement for your Right to Audit be included in any sub-contacts or suppliers to the contract)
• Purchase Orders
• Engagement Letters with your professional service providers
• Any leases you sign as lessor where there is a cost pass through provision
• Standard Terms and Conditions

One last thing. Don’t just have Right to Audit provisions. Perform detailed audits of third parties performed by subject matter experts. If you’re not quite sure where to start, reach back to me at John@JohnHallSpeaker.com. We’ll get you pointed in the right direction.

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.”