How bad things can happen to good organisations
From time to time, we encounter stark reminders of how good can become evil. It is a fact of life that unscrupulous people will always be around to take advantage of opportunity.
Sadly, we learned in the last few days of how a number of south west organisations have recently been hit by scammers/fraudsters/criminals/opportunists, resulting in significant monies being paid across erroneously to their bank accounts. This revelation is a bleak reminder of how important it is that financial processes and controls are considered as valuable commodities in our business.
Technology and the internet have led to significant changes in the way we all do business; our back office processing has sped up enormously. In-the-cloud accounting, electronic invoicing and online banking all mean we can now charge our clients quickly and be paid promptly. These produce positive outcomes for our cashflow, profitability and business efficiencies. But the old chestnut of good systems, processes and ‘checks and balances’ within the business or organisation must also come into play, now more than ever in this instantaneous world.
As mentioned before, there will always be those who turn progression into unscrupulous opportunity. Technology developments have also led to free software that makes scanning and manipulation of a document incredibly easy – as a result, fake documents can be created in seconds. Access by hackers to our servers, our information, is becoming more sinister and difficult to detect and stop. Data about anyone and anything is easily available and accessible via the internet and, as we’ve been reminded in the past few months, there is a plethora of social media outlets now sharing information in the blink of the eye.
All this means that your business or organisations is now more public than ever. Therefore, your controls are more important than ever.
This week’s news about the local businesses scammed out of literally hundreds of thousands of dollars begs the questions be asked; do you have adequate controls in place? Are document details checked for bona fides? Do you contact suppliers to check invoice details if they appear unusual? Do you double check if bank account changes are requested? Do you have strong fire walls in place to stop hackers?
It is essential to have a financial delegation of authority that clearly states the thresholds for payment authorisations, and generally reviews systems and processes.
Strong oversight and the ‘smell’ test is your best friend here. If it does not feel right, investigate, and make sure your staff are encouraged to question and seek verification or a second opinion. The potential awkwardness of questioning something is insignificant when compared to the devastation felt when something goes wrong – to say nothing of the implications on your business’ reputation and potentially its bottom line.
This is not about turning back the clock. We should embrace technology and all its advantages. It is good for business.
But we need to ensure as owners in the business, directors of an organisation, that we have all provided our organisation and employees with the right tools, the right training, and, as a result, a high level of awareness, to protect our organisation from threat of fraud.
If you’re concerned about your processes and level of protection, speak to your accountant or one of Sinclair Wilson’s experts about how to reduce the risk of your organisation falling prey to this new wave of fraud.
Felicity Melican is Sinclair Wilson’s Lead Audit and Assurance Principal and specialises in providing advice and assistance to clients across many industries within the business sector. This includes retail, services, finance, real estate, travel and agriculture, and within the not-for-profit sector including health, aged care, indigenous, and sport. Contact Felicity directly for more information.