January 2008

Volume 1 lssue 1
e l c o m eto th e fi rst i ssueof P roacti ve Amer ica' sNationalPa s ti m e
Ma n a g e me nt,a new sl etter desi gned
to h e l p y o u , the ow ner, manager,or N o, i t' s not bei ng pl ayedat Tr opicanaField. lt 's
e x e c u ti v e o f a s m a ll busi ness, non-profi t bei ng pl ayedi n offi cesacro sst he nat ion. Fr aud
ln T hi s l ssu e : a g e n c y ,a s s o c i a ti o no, r other organi zati on.W e has repl aced basebal l as our m ost popular
h o p e th a t i t w i l l h e l p you to manage those oasti me. More than a thir d of com panies
a s p e c tso fy o u r o rg a ni zati onthat are not your surveyed by the account ing f ir m
c o re b u s i n e s s , b u t that are often the most P ri cew aterhouseC oopers rep or t edt hat t hey had
A Message o v e rl o o k e d ,a n d p o te nti al l ythe most harmful . been the vi cti ms of asset m isappr opr iat ion-
FromOur B e c a u s ew e u n d e rs ta ndhow busy you are, and
usual l ytheft or embezzl ement - or som e ot her
economi c cri me i n the tw o year s pr ior t o t he
F o under th a t y o u m u s t c o n s ume i ncreasi ngamounts su rvey.
o f d a ta d a i l y , o u r i n t enti on i s to provi de, i n
tw o o r th re e s h o rt a rt i cl es,i nformati oncri ti cal A ccordi ng to the recent R epor t t o t he Nat ion
to e v e ry o rg a n i z a tion, but not usual l y by the A ssoci ati onof C erti fiedFr audExam iner s,
Who We Are: c o n ta i n e di n p u b l i c a t i onsspeci fi cto your trade occupati onalfraud and abuse is a widespr ead
o r i n d u s try . probl em that affectsnearl yever yor ganizat ion.
A Summaryof The typi cal organi zati onl oses 5%of it s annual
Proactive We w e l c o me , a n d n eed, your comments, revenueto fraud. A nd i t' s not just happening
a d v i c e , q u e s ti o n s ,o r other i nput to hel p us at l arge corporati onsl i ke Enr on,Wor ldCom ,or
Mana g e m e n t p ro v i d eth e i m p o rta n tand rel evanti nformati on H C A . In fact, smal l busi nes sesof t en suf f er t he
n e e d e d to h e l p y o u l ead your busi ness or most. In organi zati onsw it h f ewer t han I 00
profi tabl y,and w i th
o rg a n i z a ti o ns u c c e s sful l y, empl oyees,the medi an l oss was $ l 90, 000 per
i n te g ri ty . scheme. Thi s w as hi gher t han in even t he
Corporate l argest corporati ons.
F r aud: P a u l L a rn e d
The most common frauds in sm all businesses
A me rica 's i nvol ve empl oyees fraudulent ly wr it ing
Did you &aowthat the City of
National St, Petersburg receivesan avenge of
company checks, ski m m ing r evenues,
Pastime? processi ngfraudul ent i nvo ices,and expense
morc thao 200 enployneat rei mbursementfraud.
disciniaation conplaints
W hat shoul d be most sob er ing t o t he sm all
organi zati oni s w ho w as found t o be t he m ost
SignsOf Who We Are l i kel yto commi t w orkpl acefr aud. lt 's pr obably
Workplace your most trusted emp loyees. Fr auds
P ro a c ti v eMa n a g e me ntS ol uti onsw orksto sol ve commi tted by empl oyeeswho had been wit h
Fraud: ma n a g e me n t p ro b l e m s, w hi ch management the vi cti m for ten yearsor m or e causedm edian
KnowThe o fte n m a y n o t e v e nk now exi st. W e col l aborate l osses of $263,000, w hereas em ployeeswit h
W ar n in gSi g n s w i th o rg a n i z a ti o n sto protectthei r assetsfrom one year or l ess caused m edian losses of
h a rmfu l a c ti o n s c o mmi tted by empl oyees, $45,000. Thi s may be l i nked t o t he posit ion
a g e n ts ,c u s to m e rs ,a nd others. W e do thi s by hel d, si nce the l onger an e m ployeewor ks f or
fi rs t c o n d u c ti n g an i nventory of your an organi zati on,the more likely t he em ployee
w hi ch
c o m p a n y ' sl i a b i l i ti e sand vul nerabi l i ti es, w i l l advance to i ncreasi ng levels of t r ust ,
ma y a l s o u n c o v e r present w rongdoi ng. authori ty,and autonomy. This leadst o gr eat er
P ro a c ti v eMa n a g e mentS ol uti onsw orks w i th opportuni ti esto commi t fraud. They will also
th e c l i e n t to e s ta b l i sh or i mprove upon i ts become more fami l i ar w i th t he or ganizat ion's
E th i c sa n d C o m p l i a n c eP rogramto preventand operati onand control s,i ncludinggaps in t hose
d e te c tv i o l a ti o n ss p e ci fi cto i ts i ndustry,as w el l controIs.
a s th o s e c o mmo n to e veryorgani zati on,such
a s fra u d , e m b e z z lement, harassment, Pleasesee Pastime on page 2
w o rk p l a c ev i o l e n c e ,di scri mi nati on,computer
a n d s o ftw a re l i c e n si ng i ssues, and many
o th e rs .
Did you &aowthat apprcrinately 550
enployneatpmcticeslawsuits arc filed
ia the 0aited Stateeeveryday?
PleaseseeWhoWeAre on page2

Pr oac t iv eM ana g e m e n tS o l u t i o n s ,4 0 5 8 t hA v e n u e N o r t h , S u i t e E , S t . P e t e r s b u r g ,Fl o r i d a 3 3 7 0 'l

t h o n e :7 2 7 . 2 5 4 . 1 8 8 1 . F a x ; 7 2 7 . 2 55 . 50 0 8
Pr oac ti v e S o l u t i o n @ c o m c a s t . n eP
Who We Are continued Pastimecontinued

A comprehensive Programis not only

Ethicsand Compliance So,what canyou do to reducethe chancesof fraud,theft, or
mandatedin many instancesby the law, but it is alsojust embezzlement from happeningin your organization?Don't
plaingood business.Studiesshowthat organizations with wait to take action. lt may be too late. Startnow to imple-
soundEthicsand Compliance Programsdo betterfinancially ment a comprehensive Ethicsand Compliance Program,in-
revenue;
in the form of increased havereducedoperatingcosts; cludingan anonymous reportingsystemfor emplo;rees, ctls-
improved sales, br and image, and reputation;stronger tomers,vendors,and others. Accordingto the Reportto the
employeeloyaltyand commitment; increasedcustomerloy- Nation.the detection of fraudsin smallbusinesses weremuch
alty;and enjoygreateraccessto capital. more likelyto be discovered by accidentthan by any other
means,suggesting theydo not do a verygoodjob of proactively
Pro a c t iv eM anagem e n tS o l u ti o n si s detecting fraud.LessthanI 0%of smallbusinesses hadanony-
l e d b y P aul Lar ned, a re c o g n i z e d Did you *aow that mousreportingsystems.But,in thosethat did, the median
e xp e r t in c or por at eco mp l i a n c ei s - a oew Floida law losswas$ I 00,000perscheme andwasdetected in I 5 months.
su e s, who was f or m e rl y th e C h i e f requircs enployerc Thosewithoutsuchreportingsystemssuffereda medianloss
Co mplianc e O f f ic er o f a fo re n s i c to provide leave to of $200,000,and took 24 monthsto detect.
a u d i ting f ir m . He wa s a l s o o n th e victins of domeetic
staff of the United StatesSentenc- The two other most effectivetacticsto deter or reducefraud
fioleace? lossesare ethicsand fraudawareness training,and surprise
i n g Com m is s ion, t he a g e n c y th a t
fo rmulat ed t he gui d e l i n e s th a t audits. The use of eitherof thesewas alsofound to reduce
nearlyevery federal agency now relieson to evaluatecompliance the lossesin half,and reducedthe time of discovery from 24
p ro g ra m s and t o imp o s e c o mp l i a n c e p ro g ra ms on those monthsto l5 months.
o rg a niz at ions who r u n a fo u l o f th e l a w . Ad d i t i onal l y, he
h a s b e en a m em ber o f th e Se n te n c i n gC o m m i s s i o n' sN ati onal Aftera victimorganization detectsa fraudscheme,the chances
Fa cu l t y , and has t au g h t th e Se n te n c i n g Gu i d el i nes for of its lossesis not likely.ln 42%of the cases,
of a full recovery
Org a n iz at ions and c o m p l i a n c e to j u d g e s , l a wyers, l aw thevictimwasnot ableto recover anyof its losses.In another
e n fo rc em ent of f ic er s , a n d o th e rs . H e h a s a l s o i nvesti gated 23.4%of cases,lessthan one-fourthof the losseswere re-
a n d l o r m onit or ed ne a rl y 1 0 0 o rg a n i z a ti o n so n b e hal f of the covered.
Un i te d S t at esDis t r ic t C o u rt.
Byinvesting a smallamountnow in a preventive program,you
Be ca us eof t his ex pe ri e n c e ,P ro a c ti v eMa n a g e me ntS ol uti ons can help reducethe opportunities that existfor commission
i s u n i q uely pos it ion e d to m o re e ffi c i e n tl y c ra ft ethi cs and of fraudor otherunlawfulconductin your organization.Not
co mp lianc e pr ogr am s s p e c i fi c a l l yd e s i g n e d to p r otect your onlywillyou sleepbetterat night,but it will be far morecostly
o rg a niz at ion, as wel l a s s a ti s fy fe d e ra l re g u l a to rs and the if you wait and discover
wrongdoingby accident.
co u rts , A ddit ionally ,s h o u l d y o u r o rg a n i z a ti o no r e mpl oyees,
d e sp i tey our bes t ef fo rts , b e c o m ea ta rg e t o f a n i nvesti gati on
o r ci v il laws uit , it w o u l d b e v e ry re a s s u ri n g to have our Signsof WorkplaceFraud
e xp e r ienc e on y our s i d e w o rk i n g to w a rd mi tigati on of
a n y penalt ies . The bad newsis that if you observesomeof thesewarning
signs,you may havetheft, fraud or embezzlement in your
make i t business.The good news is that if you are observant,you
To p ro t ec t y our or ga n i z a ti o na n d s ta k e h o l d e rs we,
e a sy for y ou, beginn i n gw i th a n i n i ti a l c o n s u l ta ti o nat no cost maycatchwrongdoing early,andcut yourlossessignificantly.
o r o b ligat ion. F or m o re i n fo rm a ti o na b o u t o u r s e rvi ces,cal l
. ls financialcontrolcenteredaroundone employee?For
u s a t 727. 254. 188 1o r e ma i l P ro a c ti v e S o l u ti o n @comcast.net
instance,do you havean employee for
who is responsible
both accountsreceivable and accountspayable?
. ls shealsoresponsible
for bankreconciliations?
. Are your recordsdisorganized?

ZTEC,,,,i#:ig!ix:.
R - INT I NG
. Areyour revenues
a commensurate
rising,but your profitsare not risingat
rate?
. Do you havean employeewho works late,on weekends,
and doesn'ttakevacations?

{ fustom I rinting(,o.p"ng . ls therean employeewho is often stressed,overlyprotec

attitude?
tive of herwork,and hasa disgruntled
5p e.i uli'i"g l" lli gh Q" ^litg, Oni 1ue
(orporat ication Matcriels . Are you gettingcomplaints aboutbilling
from customers
f.ottun
errors?
Cn[[Todny AruAppoirurruerrrr
ToSckedu]e . ls therean employeewho seemsto maintainan expensive
standardof livingwhichdoesn'tseemto be explainedby
(727) 896,017O . Fnx(727) 896,8770 his salary?
ll29 Nonrh. Sr. Perensbunq,
l}rh AvEruue Flonidn11704 . Are therenewvendorswhichyou haven'tverified?