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Internal Controls…Par for the Course

July 30th, 2013 by Associate

“It took me 17 years to get 3,000 hits in baseball.
It took one afternoon on the golf course.”
– Hank Aaron

Golf has long been used in the business world as a networking opportunity, which is provided by spending five hours nudging knees with the person next to you in a ten horsepower cart. The parallels between golf and business are striking – both require a great amount of creativity, precision and effort to (attempt to) master; also, fraud is prevalent, yet very preventable.

Scenario: You (the CEO of ABC, Inc.) arrive at the golf course at 1:00 on Friday afternoon with three of your fellow 25 handicap co-workers, and are given the following option – four carts carrying one person each, or two carts carrying two people. Since no one can hit the ball in the fairway, you elect to take four carts since it will certainly be the most efficient use of your time. When you get back to the clubhouse, the four scores are added up – 96, 98, 102, 82. “How did Bob shoot this well?” you ask yourself. You call up your auditor and demand to know how it happened, and you are provided with the following report:

Since everyone had their own cart, no one was there to watch Bob use his foot wedge in the rough.

While it may not always be as efficient, a great way to prevent fraud is dual controls. Always put Jim in the cart with Bob, because the chances of Bob kicking the ball up to the green diminish significantly knowing that someone can see him doing it.

Bob’s three consecutive birdies after a pair of triple bogeys should have clued you in.

Detect warning signs – if one of your employees is disgruntled or going through tough times, their incentive for fraudulent activity only increases. Other common warning signs include working excessive hours and never taking vacations.

Once you threw your nine-iron further up the course than your ball traveled, Jane was too nervous to approach you to say she saw Bob fluff his ball up out of a bad lie.

Ensure that the workplace fosters an environment where employees feel comfortable approaching you with any issues they have, fraud related or not. The most frequent identifier of fraud is tips from other employees.

“Golf is a game whose aim is to hit a very small ball into an ever smaller hole,
with weapons singularly ill-designed for the purpose.”
– Winston Churchill

Just as golf is constantly becoming more challenging, would-be fraudsters are improving their creativity, making fraud harder to detect. The key difference is, where golf has ‘weapons’ ill-designed for the purpose of achieving your goals, businesses have all the ‘weapons’ to prevent fraud at their fingertips. We are here to ensure you are properly equipped.

*Thank you to Mike Effler, Assurance Senior, for his contributions to this post.

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