Recipes for the CFO: How the Books are Cooked! - Chapter 2

Welcome to TishTrek - THE JOB BLOG!

Corporate quote for the day: "When there is no integrity, you have no brand." - Tish

A Fortune 500 company moved its offices from Manhattan to Jersey City in the late 1980's. At the time, there was a federally mandated change in I-9 Immigration Processing, so - as a precaution until the full extent of the mandate was understood by the firm - an employee in Human Resources was given the responsibility to retrieve citizenship documentation from contractors. Many worked for the Information Technology consulting firms that were chosen to facilitate the company’s move across the Hudson River. While focused on this assignment, it was discovered that over an 18 month period the company had been billed for 32 IT contractors who did not exist.

There were management teams who willingly signed off on timesheets and invoices for work that had never been performed. Timely payments had been made to the vendor, checks were cashed, etc... In this case, the managers were not silent partners of this particular consulting firm. Their approach to profit was to willingly take compensation from the firms whose revenues had been enhanced by their willingness to commit fraud.

Interestingly enough, the payouts to managers had come from other shell companies & limited partnerships which were conveniently registered to the same address of the IT consulting firm that had "won" the telecommunications contract. Their job was to set up a network infrastructure between the New York and New Jersey facilities which - in this case - had to be connected by way of tunnels under the Hudson River.

Why we should be outraged by situations like this is because it is an absolute affront to all the honest, hard working employees inside your company; and it's not fair to those tremendous partners in the IT vendor community who do execute their business with the best interest of your company in mind and with the appropriate level of excellence and integrity every single day. In these situations, these business leaders don't even get the opportunity to compete; and the company's shot at a best value-best buy proposition is totally undermined and compromised.

When we fail to address issues like this, we are forcing employees in good-standing to be managed by people we hired who lack honesty, integrity and other leader behaviors which research confirms has followed them since they were kids.** So what should you do?

It takes high caliber hires and excellent recruitment screening processes to keep repeat negative behaviors from adversely impacting your bottom line, so take the hiring process in your company more seriously today than you did yesterday. Then, ask yourself if it ever dawned on you to make someone responsible for physically counting all those contractors you are being billed for around the globe?

Remember that it takes world class processes in procurement and purchasing to battle white collar criminals who look forward to enhancing themselves off the back of your company anytime you give them the opportunity to do so. Today's advice is to start that audit of your end-to-end vendor management practices & policies.

Finally, do something to help innocent employees stuck in the middle of these awful schemes behind the scenes by promoting an MTA-like campaign which accentuates the values driving your firm. The theme: "If you see something, say something. Our success depends on it!"

Time is money, start now.

Best regards,
TishTrek


**Lominger Behavioral Studies