They were the last people you would ever imagine would steal $____________ (fill in the dollars).
My professional background was originally in accounting. I held various positions ranging from a NATO budget analyst to the Financial Controllership of a major corporation.
In the course of this wide-ranging career it was my dubious privilege to become acquainted with various individuals who had committed fraud. Recently I was once again confronted by the news that a past customer of ours had committed embezzlement and was now facing jail time. This was the second time in the last year that I had heard this kind of news about people I knew. My reaction has always been the same. It’s the one that is classically recorded in the media to these events……. “I can’t believe it; he/she seemed like the last person who would do that!” After a 40 year professional career nothing has changed in this respect. I remember having dinner with a customer many years ago and in the course of that evening I mentioned the sophisticated auditing capabilities that were in our software (which he was using) but which were hidden from the user.
Almost immediately large beads of perspiration broke out on my customers face accompanied by the words “WHAT!!! YOU DIDN’T TELL ME THAT!” You can guess the rest. The amount stolen was in the millions. The message here of course is that we MUST implement best practices in our accounting processes and software when it comes to discouraging embezzlement and trust NOT in our judgment of somebody’s “niceness.”
It is actually almost impossible to completely eliminate the possibility of fraud when it comes to a determined embezzler. Embezzlers I have spoken with have in many cases started out with the promise (to themselves), that they were “borrowing” the money and would put it back when in a position to do so. When they subsequently were unable to pay it back, there then was a rationalization process whereby they convinced themselves that they somehow had “earned” it on just this occasion, so no problem. Needless to say, that rationalization progresses to the point where it becomes a “right” to steal on a frequent basis.
Good prevention practices are a combination of processes like division of responsibilities so that no one person controls the finances, and taking advantage of security features found in your Accounting software. Some software packages are of course much more capable in this area than others, and by and large you get what you pay for.
To learn more about the security features of our software and fraud prevention please contact us or our accounting software partners CriticalEdge Group.
It’s no secret that these days unions are under attack at many levels from their political and ideological foes. Some of the more recent tactics are directly aimed at disrupting or crippling a union by using indirect methods, such as attacking their administrative functions. A prime example of this is the threatened removal of “dues check off”; the procedure whereby a union organized employer deducts dues amounts from the union employees’ payroll check and remits the amounts directly to the union in question. Members’ dues of course are the life blood of unions. Disrupting the dues check off or other collection procedures in such a fashion as to force the union to collect individual dues from every member, can seriously threaten a union’s existence. As another example, think of how the Bush-era changes in the LM-2 regulations forced you to spend time and money re-working your bookkeeping and accounting. Or, think about how changes in the right-to-work laws are profoundly affecting organized labor.
The potential for these “indirect” attacks should make every union examine their “back office” procedures (accounting, membership administration, benefits administration etc.) and think proactively about how to be prepared.
Here are three pieces of advice that we could give unions in this direction:
- Focus on what the prime mission of any union is – organizing and mobilizing your members
- Get expert assistance in the areas in which you are not an “expert.” This usually means your “back office.” Whether you have a full time, paid back office staff, or are a smaller organization with volunteers performing these tasks, make sure you have the best tools in place.
- These attacks are not going away. Plan for the future and avoid short term thinking. Maybe your opponents didn’t win this time around, but they will try again.
To achieve these objectives means investment and thinking about your union for the long term. It cannot be done “on the cheap.” Getting expert assistance does not mean your brother in law who took a week long course on programming or the guy next door who “keeps books”. It means delegating your back office functionality as much as you can to experts in the following areas:
- Accounting and Financial Control
- Membership and Dues Administration
- Benefits Administration
- Information Technology
Getting real experts in these areas will pay off hugely in the long term. This fight is going to be waged in the long term.
If you want expert advice on any of the areas above contact us for a free conversation and evaluation.