STOP! The Controls Madness . . . Part I

I saw this headline recently and it got me thinking . . . .

Many organisations have been encouraged, and in some cases required, to focus their financial risk efforts on controls, developing an internal control system, regularly assessing the efficacy of controls and reporting against that for audit and compliance purposes.

Any good internal control system is risk based, but the excesses

The 'Great Potato Fraud of 2012'

I wrote a few weeks ago of the pride and complacency of the middle management fraudster and the 'smartest guys in the room'

On a recent ski trip I had met a guy on a chairlift

Are we all better than average at risk management?

Who's fooling who?

CFO magazine recently published a fascinating article that is another example where executives all think their organizations are above average. The article observes that experts estimate that internal fraud costs companies 3% to 5%

Perception, Risk and Safeguards

I gave a talk today at the Enterprise Risk Management (ERM) Symposium in Washington D.C. We divided the time 60/40 between my presentation and a group discussion on implications, especially for the Insurance industry. We had a lively discussion with CROs and risk professionals

Fraud, 'Smart Guys' and 'Better Than Average'

I was skiing the weekend before last in the Swiss Alps and as luck would have it, a rather interesting conversation developed on a chair lift. A pretty long lift as it happened . . .

The only other person on the chair was a guy who introduced himself

Accounting Regulation Reducing Fraud, Really?

An article in CFO magazine today announced the opinion that the US 'Jumpstart Our Business Startups' (JOBS) Act, whilst easing the Sarbanes-Oxley (SOX, Sarbox) standards, might pave the way for fraud. You can read

Will it make the boat go faster?

I had a interesting chat with a friend the other day, where he recounted this quote from a world record beating sailor (I forget the name, but it is not critical to the story).

Risk, misplaced confidence, early warning systems and health checks

I am sitting in a 6^th floor office in Manhattan and ruminating between meetings. Over the past couple of years

May we live in interesting times !

2011 has been a year of both turmoil and progress in the world and in many businesses. It’s certainly been a roller coaster ride!

Why CONTROLS Monitoring is not enough . . .

This picture says it all for me. I could stop here . . . .  . 

The car park barrier is the 'control' over access and use of the car park. The automatic gate opens only when you swipe your employee badge on the reader and it only lets one car through at a time. This way, it is clear that only authorised people can use the facility and that a record is kept of each visit. The automated control works perfectly and as designed. There is even a regular testing and maintenance cycle!

The tyre tracks tell us whether this control is achieving its desired effect.

Obviously not in this case!

Thats why, irrespective of the debate on where the responsibility lies, it is important to test key controls in business and equally important to check the 'tyre tracks'. The tyre tracks tell us what is actually happening and whether our risks are being effectively mitigated.