Page 33 - Internal Auditor M.E. - June 2019

TO cOMMenT on the article,
eMail the author at majed_404@hotmail.co

factor among staff, which is required inventory, and thus convinced him to Lessons learned
to accomplish business smoothly and only sign on the dotted lines. The assistant
easily, becomes an opportunity that can was convinced, and signed on the basis of While analyzing the incident, there were
be exploited and manipulated without trusting his manager (the assistant was not some lessons learned that must be shared,
affecting the person committing the act? keen to apply the company policy). The which are:
manager acknowledged that there were · It is necessary to know the purpose of
An incident that happened in a
company shows that the disregard for no differences in stock and informed him the policies and procedures that are
the implementation of some actions as a orally, not in a written report that once he developed and applied, and not just
result of trusting certain staff, eventually returns from his leave he would take charge skip through them without applying.
led to fraud, which could occur in any over the showroom. Therefore, the assistant The employee must understand the
other company. The added trust towards took charge of the showroom, and the policies and procedures assigned
particular personnel, coupled with the manager travelled on vacation. to him/her, or at the very least, ask
leniency or laziness in the implementation After the manager returned from his leave, colleagues if any point was unclear.
of controls were the cause of this fraud case two days went by and the manager did not · The company must analyze any fraud
as would be revealed in detail through the ask his assistant to hand the showroom incident, dive into its root causes,
remainder of this article. over back to him, as was agreed orally and not take any measures without
between them. And as soon as he asked fully knowing these reasons, not as in
the manager to do that procedure, the
Incident Details manager replied with: “I do not take the incident discussed in this article
where the company only dismissed the
A certain company is made up of a group charge of anything until after an inventory employee(s) without analyzing the root
of showrooms. According to the policy counting”!!! ... Then, he raised a letter to causes of the incident.
of the company, each showroom should the company’s main office to contact the
have at least one manager and an assistant; showrooms management where he asked · The recurrence of the incident is
however, this does not necessarily mean for an inventory committee to oversee the indicative of a certain pattern of
that there are no showrooms with one process to complete a showroom handover. fraud that must be acknowledged and
personnel only, due to lack of hired staff. The committee attended, oversaw the prevented from ever happening again.
This is the case in our discussion of this inventory counting and found differences We noted in the incident the use of
fraud case here: one of the company’s in their numbers... The assistant was the same method with three different
showrooms suffered from a difference shocked and stated he was not aware of employees in the same showroom with
in the inventory due to the manager of such differences and pleaded his innocence the exact same manager.
the showroom selling the products in that he did not sell these items during the · Staff rotation helps detect errors, abuses
the name of his own personal account manager’s vacation period!!! Then the and any differences in inventory as
(since the sales were not registered in the committee asked him; is not this your a result of the receipt and delivery
company’s books). Since he works alone at signature on the inventory record? To
the exhibition without the availability of which he replied with “Yes, but it is just process. The company did not have
a second pair of eyes. Later, the company a formality”. The inventory committee a policy to rotate its staff between its
decided to appoint another employee – informed him that as soon as he signed the showrooms.
an assistant manager – to assist him in records, he become responsible and was
performing the tasks assigned to him. This now accused of embezzlement from the
decision served as a gift from heaven to the company. Conclusion
manager to get him out of his troubles in The assistant was obliged to pay the value Policies and procedures are designed
the inventory... so, how did that happen? of the stolen items, which he did not steal, to ensure that work does not prevent
The manager decided to go on a short leave and was relieved from his duties. This the existence of trust among staff
for several days. The company’s procedures exact scenario happened with two others from applying these said policies and
stated that the showroom inventory in the same way ... The manager steals; procedures. The case of fraud addressed
must be counted and documented in the the assistants pay the difference. Had the in this article showed that trust could
inventory books before the showroom was assistant applied the system and internal turn into an opportunity that maybe
handed over to the assistant, and that he policies of the company, he would have exploited. Without the presence of such
was responsible during the period of the protected himself from exploitation from an opportunity, the showroom manager
manager’s vacation. However, the manager such fraudsters. Later, the company made a would have been unable to hide the stolen
belittled the importance of the inventory surprise visit and an inventory counting of items from the inventory and would not
to the assistant, informed him that it is the same showroom, which helped uncover have been able to shift responsibility onto
just a formality, it’s just a short leave of the manager’s misdemeanor, resulting in his assistant.
absence, and that it does not warrant all the company taking the appropriate action
this hassle and effort to go over the entire against him. Majed Al Rashid

JUNE 2019 INTERNAL AUDITOR - MIDDLE EAST 33