By John Beard; CPA, CFE
Wouldn’t it be nice to have a crystal ball or to be clairvoyant in forecasting potential business issues such as internal fraud? Unfortunately the vast majority of us are not psychic and instead have to rely on an investigative function to identify problems, or manage crises after the fact. So, what can we do to be more attuned to emerging problems within our organizations? Here are a few things for internal auditors or security chiefs to think about:
- Organizational intelligence
- Rapport
- Trust
- Communication
- Danger signals
Organizational Intelligence
Your people are your best source of information. Properly developed and managed, your human intelligence sources can reveal issues before damage has been caused. There are simple processes that can be implemented to provide reliable information on potentially critical issues facing an organization, and thereby front run costly events that typically have to be managed in arrears.
Rapport
The security chief or internal auditor should establish meaningful rapport with key personnel on the executive management team in both operations and finance. This will provide useful information as to what management’s current concerns and expectations are regarding the business. It is also essential to build relationships with middle level managers who might otherwise be hesitant to go directly to the executive level with concerns.
Trust
Trust is a virtue that instills faith and confidence, but it can easily be lost, which will prove costly. Trust also establishes credibility, which is the most important asset of the internal auditor or security chief. Since the investigative function is based on independent assessments, a loss of credibility renders the information worthless.
Communication
Clear, concise, and unbiased communication—up and down the organization—is worth its weight in gold. We must always remember to present the facts: good, bad, and ugly. This form of communication will help solidify trust within the organization.
Danger Signals
There are always signs that will foretell impending unfortunate situations in any business or organization. Some of these are: sudden unexplained drops in profits, increased equipment failures, excessive decrease in inventory without corresponding sales increases, creditors calling—the list goes on…
Organizations that seriously want to improve their bottom line and have a healthy employee morale will establish processes to nip potentially catastrophic issues in the bud. It takes professional assistance and time to properly set up a network of reliable information gathering and analysis to head off or deal with these matters early on to protect the organization’s most important asset: its reputation.
Call the professionals at ResultQuest® at (713) 781-9040. We are skilled in assisting businesses in developing systems to front run issues and thereby minimize the risk of problems such as internal fraud.