Tag Archives: separation of duties

Oh Yes, She Did!

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In previous posts, when talking about the importance of controls in a system to help prevent fraud, I discussed the case of Amy Wilson. These posts were specifically about how trust is not a control. Regardless of how nice a person seems to be (or is) or how long someone has worked for you, you should never decide that you can trust them enough to forgo system controls. It really cannot be said enough, trust is not a control. It does not matter how good a person is or how long they have worked without ever considering defrauding their employer, there may come a time when they face great pressure to commit fraud. It is important that, should this time arise, there are controls that deter them from giving in to temptation.

In my first post about Amy Wilson, I discussed how many controls I come across when I run a race compared to how few controls I have seen in many businesses. I continue to be amazed by this; people will put so much into making sure folk aren’t fabricating their running times, yet they are willing to trust those very same folk with their money and assets. The second time I wrote about Amy Wilson, I had watched her enlightening interview on the Attestation Update website. Here and in the articles she has authored, Amy Wilson speaks very clearly about what she did and how she could either have been caught or have never had the opportunity to perpetrate the fraud.

Well, fast forward to today. I received notification, this morning, that Amy Wilson had visited my website and left me a comment. She was very complimentary (whew!). I am glad because Ms. Wilson does have great lessons to impart and I appreciate that she does not take issue with how I have shared her story and lessons. To have real life examples of where the weaknesses in a system were, how they were exploited and the ultimate consequences of all of this is absolutely priceless. When it comes to designing and instituting controls in a financial system, it is imperative that this is performed effectively and consistently. In order to make sure that this process is correctly implemented, the stories must be told clearly, correctly and honestly. It is fantastic that Ms. Wilson is unflinching when she talks about what she did; that kind of thing does not happen often. This kind of honesty helps forensic accountants get better at what they do and, hopefully, businesses get better at deterring, preventing and detecting fraud. Finally, feedback like Amy Wilson’s helps me feel happier about what I do.

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Stuff It

Back in the early days of my time as an auditor, I went on many inventory counts. Because companies would have to close their businesses while the inventory count was going on, they tended to happen over the weekend. I am yet to meet anyone who likes to spend their weekends at work and it is even worse when all of your friends are going to be sleeping in or doing something fun while you are at work. I could complain (and I am sure I did) but it was a necessary part of the work that I did and so I spent several weekends at a client, observing their inventory counts and carrying out audit tests. One particular assignment sticks in my head. I went to a company that had a very large inventory of bags of cement. I cannot, for the life of me, remember what the company did – whether it was construction or the manufacture and sale of cement. Either way, there was a huge warehouse, filled with stacks of these bags. I don’t know how much you know about cement but, what I found out that day is that cement is very powdery and the small particles are very good at escaping the bags that they are put into. You could see the air in the warehouse; it looked a little like the inside of a snow globe, except for the fact that no one would ever make a snow globe of mountains of brown bags. One of my tests involved test counting areas of inventory to see if my numbers tied up with the numbers counted by the client. I walked around sections of the warehouse and counted stacks of bags – the length, breadth and height – and multiplied numbers to come up with totals. I was not done though. I had to make sure that the mountains were made up of cement bags all the way through and not, say, hollow in the middle. So, I climbed up the dusty stacks of bags, fighting my fear of heights in the name of my mission, and checked to make sure that the stacks were not hollow. I then also had some of the staff at the company move some bags around to make sure that the stacks were made up of only cement bags and not bags of some other filler. I went home that day coated in a film of cement dust. I know my neighbors were wondering how an auditor could get so dirty at work – didn’t I just work with a calculator and pen? Ink stains were expected, but not cement. For all the complaining that I did about spending my Saturdays on inventory counts, I found a lot of the assignments, like this one, to be a lot of fun and rather exciting. I got to be queen of the cement mountains and bound about, on high, in the name of thoroughness.

If you have a company that sells or makes any kind of stuff, you will have inventory, which is also called stock. In accounting lingo, inventory is considered to be an asset because it is something that is expected to make you money in the future. For the very reason that inventory is expected to make you money in the future, it is important, for the health of your company, to safeguard your inventory, so that someone else doesn’t make off with it and, thus, your future money. I have spoken many times about many ways to prevent fraud and error with financial statements, but a lot of these steps can be translated into making sure that you hold on to your stuff.

In the world of inventory, your stuff disappearing is referred to as shrinkage. It makes it sound like you didn’t follow the instructions for laundering clothing, but it basically means that someone is stealing from you and, I don’t know about you, but I don’t like it when people steal my stuff. Any advice I can take to keep that from happening is good advice to me. The first step, in order to protect your inventory, is to keep it locked up. I have told you before about the steps my husband took to install physical barriers to access to his belongings in his studio. These are the types of steps that you should take in physically safeguarding your inventory, your stuff. Depending on what you have and what your needs are, the physical safeguarding may be locks, cameras, doors with security codes or even those fancy retina scanners that we see on crime shows. You should not only keep your inventory under lock and key but also limit access to the inventory to a few authorized parties. Only people with a reason to get to the inventory should have access. This makes it easier to trace the movements of inventory and it also serves as a deterrent to those who might think about pilfering inventory. If the list of suspects is a short one, those people might think twice about stealing.

The segregation of duties is also vital with inventory. The cycle of inventory begins with its purchase. Inventory is then stored until it is needed for manufacture or sale. Sometimes inventory is damaged, expires or is otherwise no longer of value to you and your company. When this happens, the inventory is either destroyed or sold, at a loss, to someone else who still finds it useful. Now, if one person has control over this process, from purchase to sale or destruction, there are many opportunities for fraud. For example, a person may take inventory, sell it for a profit and then write off that inventory as obsolete, pocketing the money made from the sale. Another example of fraud is ordering and receiving, say, ten items, but claiming that only nine were received. This person can then take the tenth item for personal use or profit.

Another very useful and important control is the use of preprinted, prenumbered documentation. These documents range from order forms, to receiving reports and shipping reports. All movement of inventory coming in and going out must be documented and those documents must be prenumbered. Gaps in the document numbering, or repeated numbers, will raise red flags that should be investigated. Missing documents should also raise red flags that should be investigated.

Inventory is your company’s stuff and it is important to seek out the advice and guidance of qualified CPAs to best protect it. Doing so dissuades potential criminals from trying to take it and also will make it easier to track it down, should someone take it. Taking the time to adequately plan and incorporate these controls into your inventory system can protect you from loss. I know I get worked up about people messing with my stuff and I am pretty sure you feel the same about the stuff that helps your business run.

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From The Horse’s Mouth

Mister-Ed-Talking-HorseEarly last year, I wrote about Amy Wilson and the lack of controls that existed in the company that she stole from. The complete lack of controls and reliance on trust gave her the opportunity to steal from the company, which she did… for four years. She was actually caught by the fraud department at the credit card company, not by her employers. Anyway, I am talking about her because Jim Ulvog has an excellent post on his website, Attestation Update. Here, Amy Wilson tells us about her fraud, how she was caught and how she got away with things for as long as she did. It is an excellent watch and a great reminder of the very wise words – “trust, but verify.”

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It’s A Good Hurt

This morning, after my run, I pulled out my yoga mat and foam roller and embarked on my post-run stretches. I am yet to come across a runner who looks forward to the stretching – most of us confess to not stretching enough. And as much as we deplore the stretching we tend to do that more often than the foam rolling. This is because, despite the benign name, the foam roller is an instrument of torture. When I have taken yoga classes, teachers have asked me if I am a runner. They ask this, not because my yoga skills are impressive, but because my leg muscles are so tight that touching my toes is a feat; it’s not a good look. These tight leg muscles are what I target with the foam roller. I am terrible at stretching because stretching after a run is mind-numbing tedium. I am atrocious at using my foam roller after a run because trying to loosen up my tight muscles after a run hurts like hell. However, if I don’t loosen up these muscles, I am setting myself up for injuries and pain that will keep me from running for a lot longer than it takes to suffer through the rolling.

The same is true of many aspects of an entity’s financial system. There are many controls that are recommended by accountants and auditors that may seem like overkill or painfully tedious. However, as I have explained in some of my posts regarding aspects of control systems, such as segregation of duties and double entry accounting, being proactive about creating and maintaining a robust financial control system goes a long way to keeping things from going horribly wrong in the future. I will be the first person to tell you that there are many parts of an accounting system that are not fun. For example, it would be so much easier to have checks come into a company and be dumped on an accountant’s desk and have that one accountant deal with recording the check in the books, depositing the check in the bank and then reconciling the bank statement at the end of the month. Way too many companies opt for the easier path and find many ways to justify their decisions – the accountant has been with them for years, the accountant is such a nice person and totally trustworthy and wouldn’t act in an unethical manner. It’s an easy path until the money is stolen and, more often than not, not recovered. Too many stories of beloved staff members who have turned out to be fraudsters and thieves should show people that a great personality is not an acceptable control measure. Way too many times, we discover that the friendly coworkers are able to perpetuate their crime for a long time because they just seem too good to be crooks.

Record-keeping can seem like such a drag. I mean, what fun is there is debits and credits and keep track of income statements and balance sheets. Oh, and don’t get me started on the headaches that a balance sheet that doesn’t balance can bring. Why would anyone want to keep track of order forms, receipts and other elements of an audit trail? When making an adjustment to the ledger, you know that you will totally remember why you processed the change, even ten years from now. You don’t need to provide backup or keep a record of why you made the change. You wouldn’t believe how often I hear this kind of talk from accountants. Six months later, practically none of them can explain a journal entry that doesn’t have backup and this is for the accountants that have not decided to move on to another company, leaving the person who has taken over their position completely in the dark. Especially since we live in an age when people are not married to one job for life, it is essential that anyone looking at a transaction can find out just about everything there is to know about the transaction without having to employ the services of a forensic accountant.

There are times when I start nodding off just at the thought of the some of the processes I need to go through. Sometimes I think – I don’t really need to check this; the accountant has done this a hundred times, so it is probably okay. But then I think about what might happen if I am incorrect. The thought of how much more I will have to do if I don’t perform the check and then have to clean up the mess afterward pushes me to suck it up and do things correctly the first time. When, on occasion, I find an error, I know that it’s good that I decided to do the right thing. Also, the fact that those in the finance department know that work is being reviewed and being given a look-over by others is a great deterrent to those tempted to engage in nefarious behavior. I also remind myself of this when my own work is being reviewed and my ego has to be reminded that even I can make mistakes and that, in the name of outputting a superior product, the checks on work are not only good but necessary.

Running a business is not all fun, games and glamour. There are times when the physically and mentally painful work must be done in order for the business to succeed and minimize errors and fraud. I groan in pain and have to will myself to remain diligent and not cheat on the foam rolling. The neighbors may wonder what is going on but I know that this is how I can minimize injuries and keep on running happy and healthy. Likewise, though I make less noise (at least, I think I make less noise) about some of the work that I have to do, I know that this is what must be done to keep the company happy and healthy. So, do what hurts – it’s good for you.

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Who Runs Things?

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James Petrozzello

The tone at the top of an organization is vitally important. If the people running things are behaving in an unethical manner, how can one expect the rest of the firm to operate any better? If you are working at a company and you get the message that leadership is for those who operate without regard to the rules, then wouldn’t the probability be high that you would either leave or start breaking the rules yourself? Often when a leader of a company is caught breaking the law, stories follow about a culture of bad behavior at that company.

Craig Haber became a partner, based in New York, at Grant Thornton in 1993. In 2004, he opened a business checking account in the name of a company with a name very similar to Grant Thornton. Then, between 2004 and July 2012, Haber deposited $3.97 million in checks made out to Grant Thornton into the fraudulent account that he had opened. That is eight years of funneling almost $4 million in company funds into his personal account. How Haber managed to do this shows how he got the opportunity to take advantage of weaknesses in the Grant Thornton control system in order to perpetrate his fraud.

When Grant Thornton sends out bills to its clients, it attaches a page to the bill with instructions on how to either wire money into their account or send a check to their Chicago office, which is where their head office and billing department are located. Beginning in 2004, Haber would send billing statements to some clients and, instead of the usual payment instruction sheet, Haber instructed the clients to send payments to “Craig B. Haber”, in care of Grant Thornton, at the Grant Thornton New York offices. He also sent these payment instructions to some clients via email. When he received these payments, he deposited the bulk of them into the fraudulent account that he had opened. He got around the discrepancies by telling Grant Thornton that he had collected lower fees than what he actually collected.

It appears that Craig Haber had too much access to the billing system. In a company, seniority is no reason for reduced controls. Seniority should be a greater incentive for implantation of controls. Because it tends to be more difficult for an employee to say no to a higher up in a company, it is important that a system is built that says no on the employee’s behalf. All bills should have come from the billing department and the billing department should have sent clients billing statements detailing a running balance detailing payments received over a period of time. If that had been the case, some clients would have contacted Grant Thornton to find out why some of their payments were not reflected on their statement.

Grant Thornton should also have worked to limit what payments went to the partners, instead of being sent directly to the billing department. It is a challenge, but an occasionally reminding a client to send payments to the Chicago office may have gone a long way in reducing how much was stolen by Haber.

The fraud of almost $4 million translates into many billing hours that Haber was short on. I am not sure how he explained this shortfall but there should be a way to verify this for partners, in the same way that, I am sure, there is a way to verify billable hours for other employees of Grant Thornton.

Craig Haber received the Grant Thornton payments, which he then redirected to his personal account, via the US Postal Service. Therefore, when Grant Thornton discovered the fraud and reported it, the investigation was carried out by the US Postal Inspection Service and headed by Postal Inspector Melissa Atkin. True to the elements of the fraud triangle, Haber claimed that he started defrauding Grant Thornton because of financial pressure and, as you can see, he took full advantage of the opportunity to take money from the company. Haber was charged with and convicted of mail fraud and faces both a fine and prison time.

Being at the top in his firm did not stop Haber from committing fraud and perhaps being at the top of his firm meant that he was able to perpetrate his fraud without detection for longer. The Association of Certified Fraud Examiners (ACFE) has found that fraud by those higher up in an organization tends to be greater in value and to go on for a longer period of time. Being a CPA, who is supposed to practice according to a Code of Professional Conduct and uphold certain ethical standards, makes Haber’s crime even more disappointing. He stands to lose his CPA license, in addition to the jail time and fines. I would not be surprised if Craig Haber’s behavior had ripple effects among those that he supervised and dealt with, including a decrease in morale, cynicism about adherence to the code of conduct for CPAs and perhaps even bad behavior. If the people in charge are not minding the store, who will?

UPDATE

On March 12, 2014, Craig Haber was sentenced to 4 1/2 years in prison for stealing almost $4 million from Grant Thornton. During the time he was stealing that money, he earned nearly $6.9 million. Just goes to show that some people never have enough money. Now he gets to think about whether those millions were worth it. I, personally, would say no.

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Break It Up!

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I often write about internal control systems and how important good internal controls are when it comes to preventing and detecting fraud and error. A big part of this is the separation of duties. I refer to this often but it struck me the other day that I have perhaps not been terribly clear about what exactly the concept of separation of duties is all about. How does one figure out how to separate duties effectively and what purpose does this separation serve?

In a business, if there is one person responsible for a financial process from beginning to end, there is a great risk of both fraud and error. Without another party to check, review or authorize a person’s work, any errors or fraudulent activity could very easily go undetected. Recently, I heard of a woman who worked at a not-for-profit, receiving and depositing donations. A donor called the not-for-profit to inquire about a check donation that she had sent in. The check, she said, had not yet been presented for payment. Upon investigation, it turned out that the employee at the not-for-profit had been feeling so overwhelmed by her duties that, instead of processing and depositing donations, she had been taking these donations home. Checks were found piled in her home. Had the not-for-profit instituted proper separation of duties, where another party was aware and had a record of checks that had been received at the not-for-profit, it would have become apparently, very quickly, that checks were not being deposited. In such circumstances, for example, one party would record checks as they arrived at the not-for-profit, pass a copy of the check on to one person who would record the received funds in the books and then give the original check to another person who would make the deposit. Now there would be three people who knew that funds had come into the entity and the person responsible for making the deposit would not be the person recording the deposit in the financial records.

When only one person is involved in a financial process, only that one person has to be convinced to commit fraud. However, if two or more people are involved in that process, the parties then have to agree to collude to commit a crime. Those two will have to be sure that one will not sell the other out, should something go wrong. That becomes risky as, with more than one person involved in a process, there is always another person who can speak up about errors or possible unscrupulous activity. The majority of frauds are reported by a whistleblower; the proper separation of duties can go a long way towards creating potential whistleblowers.

When thinking about separation of duties in an internal control system, you should think about splitting every transaction into three functions and assigning a different person to each function. These three functions are:

  1. Authorization, which is the approval process
  2. Execution which is the accounting and reconciling of the transaction
  3. Custody of the asset involved in the transaction.

For example, in the case of Rita Crundwell, she AUTHORIZED payments and transfers made by the city of Dixon. She also EXECUTED the transactions recording them in the books and reconciling the bank statements. She also had CUSTODY of the bank accounts, holding the checks, and making the transfers out of city bank accounts and into her own personal accounts. No one else was involved in these processes so no one else could ask questions about what was going on and why.

It is vital, when setting up an internal control system with the proper separation of duties, that this system is set up by a qualified accountant who has knowledge of processes, their weaknesses and where, in those processes, the authorization, execution and custody functions lie. The accountant should be able to explain how and why duties should be assigned to different people. The accountant should be able to work with a company’s complexities and staff restrictions to come up with the best ways to safeguard the assets of that company.

It may seem tedious and overly cautious but it is far smarter to have a finance system that discourages potential fraud, than to scramble around trying to recover assets after they have been stolen. Separation of duties goes a long way toward reducing the opportunities for fraud and creating greater possibilities that fraud and error will be detected. You want a system where an employee, under pressure to commit fraud, sees that others are checking on the process and that there is a well-organized system. You want that person to decide that trying to exploit the system and steal from the entity is too complicated. You want a system where, should someone actually decide to steal, they will be discovered through the various checks and balances built into the system. So, break it up!

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What’s The Problem?

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As my training long runs have become longer, so too has my preparation time for these runs. Yesterday, it took me about an hour to get ready for my 20 mile run. I had various things I needed to do before I could head out:

  • I have an atrocious sense of direction yet, especially when clocking many miles, I like to avoid boredom by running new and different routes on my long runs. So, usually the night before a run, I pull up a run-tracking website and search for routes that others close by have run. I then make notes, with street names and turns, on a small piece of paper. I make the notes in pencil so that, even if the paper gets damp during the run, the notes will not smudge. I map a route that is shorter than the distance I needed to run, giving myself at least a mile in which to get lost, because I get lost very often.
  • I have a banana and a packet of energy gel and wash it all down with some water. It has taken a lot of trial end error (still a work in progress) to figure out what, and when, I can and cannot consume during long runs. I also take some packets of energy gel with me, to take regularly during my run.
  • I cover my body with a fancy version of Vaseline in order to reduce the chances of getting chafed.  I have found that, just when I think I have all my bases covered, a new part of my body is chafed, usually by a new piece of clothing or wet weather. When I first started running, I only needed to treat a small part of my body and it took just a few seconds. Now I am at an almost head-to-toe process.
  • My running gear choices are made based on what protects my body and inspires me. So my clothing serves the dual purpose of being comfortable and cheering me on.
  • I apply sunscreen and check the weather to see whether or not I am going to need a cap to keep the sun out of my eyes.
  • I strap a water bottle to my arm. I also try to map my run so that I run through areas with water fountains so that I can refill my bottle, should I need to.
  • I use my asthma inhaler, put on my headphones and I’m good to go.

One should pay at least this much attention to protecting your financial control systems, and the check ups and improvements should be an ever-evolving process. Part of the process is ascertaining the flaws in the systems and correcting them. There are general rules that serve as guidance, but each entity has its own peculiarities, strengths and weaknesses. For example, though both should have a policy of separation of duties, a company of six people and a finance department of two will determine how they do this very differently from a huge multinational corporation with 500 employees. Though both will have an audit trail, a manufacturer will have documents that look quite different from a consulting firm. Setting up a financial system starts with general rules, such as:

  • The double entry accounting system, of course. The double entry accounting system helps detect errors and fraud in the books. Of course, it is not foolproof, but it is a powerful tool.
  • A written procedure manual is essential. This can be used as a reference so that employees have a checklist for the work they do. It is also helpful to have this manual so that management knows what is currently being done and can review this manual to come up with improvements and revisions to the system. This manual does not have to be a complicated tome that rivals the bible in heft and verbiage. It should be straightforward, unambiguous and easy to understand. The goal is to minimize errors and misstatements in the ledger, not to confuse the users with complex language and instructions.
  • Authorization controls are very important. An example is a requirement that checks over a certain value be signed by more than one account signatory. The reasoning here is that it becomes more difficult for collusion to happen, the more people there are involved in a transaction.
  • Variance analysis of the income statement and review of the balance sheet. Regular analysis of the numbers in the books, how they relate to other accounts in the books and how they trend over time helps highlight anomalies and, at times, spot places where errors are happening or someone is trying to hide fraud.
  • The aforementioned separation of duties. No one person should be in charge of an entire accounting process. The person taking checks to deposit in the bank account, should not be the same person recording the income in the books – that would give the opportunity for checks to disappear without anyone knowing they are missing. The person with physical custody of inventory must not be able to adjust the inventory numbers in the books.
  • Regular audits of the books, both internal and external, should be performed.  A review of the financial information by parties other than those who prepare the information is an important way to check for misstatements and errors. It is a great way to get objective points of view about the character and content of transactions and whether or not they have been properly recorded.

Armed with the general rules, it is then vital to adapt these rules to the entity. A small company does not have the staff or budget for an internal audit department. However, management can decide to occasionally have auditors in to conduct audits of their records and control systems, especially if they have concerns about vulnerabilities or fraudulent activity. A company that decides to go paperless must carefully plan and closely review their new system to ensure a proper audit and authorization trail remains. They should also think about proper data backup plans. It should take more than a small fire in the server room to destroy a company’s records. Even with a small company, separation of duties is possible. A company can be creative with this having, for instance, the receptionist keep a log of checks that are received before they go to the accountant for recording in the ledger.

In the same way that it is with my running, managing and controlling financial systems is an eternal work in progress. As situations, technology and company profile change, so too do the challenges, weaknesses and strengths of the entity’s financial systems. Determining what the issues are is key to finding solutions to resolve them. There may be changes in local, state and federal laws that will require special reports or a different method of recognizing income and expenses. Staffing at a company may grow or shrink and, therefore, the assignment of duties in the company may need to change. This change may be to prevent one person taking over an entire process, which would lead to a lack of review of their work and an increase in the opportunity for fraud. This change may also be to improve a system because a larger staff can lead to more effective separation of duties. There may be software innovations that improve efficiency and staff will need to be trained in how to use this improved software.

It is important to remember that the evolution of a financial system is ongoing and that rules and procedures are not set in stone. To quote Tom Hood, “In a period of rapid change and increasing complexity, the winners are going to be the organizations and people who can learn faster than the rate of change and faster than their competition.” This includes learning how to improve and strengthen the financial systems and their controls. The goal is to always get stronger, more efficient and to prevent injury or disaster, be you running a marathon or running an entity.

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Money Trails

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I mentioned, last week, that I traveled to Zimbabwe and Mozambique. After my experiences during this, and our previous trip, in 2010, I am now pretty convinced that the government system and most companies were created by old school accountants and that very little has changed since then. It is a great reminder of how important having a good financial control system is. In our mostly virtual and paperless modern transactions, people tend to think less about how a transaction can be traced. Not so long ago, when business was more manual, it was easier to see the path a transaction took from inception to completion. One could refer to a stack of papers to see who gave their okay to a process. The separation of duties was also much clearer as documents tended to be manually moved from one place to another, or employees had physical custody over paperwork. These days, as these systems and documents have disappeared into the computer and cloud, it has become more challenging for those running corporations and institutions to think through a process and determine adequate controls and paper trails, virtual though they may be.

However, in Zimbabwe, often transactions are quite manual and, even when they are not, they are quite involved and can involve a lot of paperwork. I mentioned getting my prepaid phone line – let me tell you the process:

  1. I first had to provide a copy of my identification and fill out an application form for a SIM card. This means that it would be pretty impossible to have one of those crime show episodes where the trail for a criminal goes cold because everything was done using prepaid phones and so no one knows who the line was purchased by.
  2. I took this form to the cashier who gave me a receipt for the one dollar I had to pay in order to buy the phone line.
  3. I then took my receipt to a customer service representative, who was sitting in the booth next to the cashier’s. The representative gave us a SIM card and activated the phone line for us. We then needed air time.
  4. With proof of our activated phone line, we then went back to the cashier and paid for air time.
  5. We left the phone store with a phone line, air time and a bunch of receipts.

Our experience was similar at the border, when traveling from Mozambique to Zimbabwe – we gave payment to one person, were issued a receipt and then and received our visa from another person. As frustrating as it was to walk back and forth in order to get through the process, it was fascinating for me to see the clear separation of duties and the generation of a paper trail.

Most fun was when we received our gifts after our wedding. The afternoon after the wedding, my aunt and cousin came by with an envelope of money and the personalized gift receipt book you see above. It turns out that, during the reception, a team of wonderful volunteers, sat at a desk and received gifts from wedding guests. They then placed a piece of carbon paper (who knew that still existed) between two pages of the receipt book. After filling out the details of the receipt, they tore out and gave the original to the guest (as proof that the volunteers had received the funds) and the carbon copy remained in the prenumbered guest receipt book. Yes, numbered receipts for wedding gifts – who knew?

It is fantastic that many processes have become automated and that transactions are now completely more quickly and, hopefully, more efficiently than years ago. It is important, however, to make sure that controls and safeguards are not sacrificed in the name of efficiency. The separation of duties may feel tedious but having more than one person involved in a process means that, if one person is flouting the system and perhaps even misappropriating assets, there is at least one other person to blow the whistle on what is going on. Having an audit trail (paper or virtual) can seem overly meticulous until one needs to determine whether a transaction is valid. Creating, monitoring and maintaining a strong financial system is a much better proposition than trying to recover assets and rebuild a business after a fraud has occurred.

Also, you could get a lovely, personalized gift receipt book as part of the deal.

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