Protect and Strengthen: Internal Controls Do Save the Day
Avoid Statement Shock: Ensure Quality Financial Controls
We have all heard and read the horrible stories: significant monies siphoned out over a long period of time. Trust in one is abused and, suddenly, the impact can cause significant damage for your business.
Dealership fraud happens often and it can cost dealers thousands to millions of dollars. Brady Ware, through an independent market research study with 100 dealership general managers, studied this issue and the results are eye-opening.
More than one-third (38%) of the survey respondents had experienced actual or attempted fraud. More than half (51%) had either experienced fraud themselves or heard about a specific fraud at another dealership. Strikingly, less than a third of respondents to our survey confidently viewed their current controls as strong enough to completely deter or prevent fraud.
Vigilance in identifying and creating solutions for your system weaknesses will eradicate most, if not all, fraud. There are commonalities across all dealerships and most system weaknesses relate to the failure of the dealership to properly segregate accounting functions that deal with cash, payables, and receivables. They simply don’t know how to set up the proper segregation of duties.
Check tampering is the most prevalent fraud, but payroll comes in a close second. Having a healthy anti-fraud environment with complete buy-in from managers is essential. Create a policy and a culture that reminds your staff of criminal prosecution for fraud is also key while avoiding a casual approach to approving expenses.
Internal controls can be established, tested and reviewed through access controls, logins, electronic banking transfer capability, and so much more.
At a time with strong profitability and fast-moving inventories, be vigilant and ensure your systems are designed to protect your businesses.
For more information, contact your Brady Ware advisor.
