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Rod SmithWhat would you do if you saw a steady increase in your business expenditures?  Let’s say that uptick was more than 5%.  You reviewed your expenses compared to the previous year and found your expenditures are exceeding last year’s budget by more than $250,000.

I came across this phenomenon recently and found the problem wasn’t what you think.

You see, this organization was experiencing many issues and they were without their finance and business managers, which compounded the problems.

So, a team of three individuals were assigned to review their expenditures and address the management’s concerns.  As they assessed business process and protocol during a breakdown session, it was found that key control issues (mostly from missing personnel and separation of duties) was the problem.  Some of the process seemed normal:  invoices were sent to the accounting department; accountants processed the payment vouchers and the disbursement unit would issue checks to the vendors.  However, the key and missing control was that no one submitted the statements or invoices to a project manager or business manager for approval, so no one was monitoring if orders were reasonable or falling within budgets. Furthermore, the team discovered that their accountants had multiple errors related to their entries, so their system data was inaccurate, and the numbers were wrong.  Since they were without their finance manager, controls were forgotten and financial entries and reports were not scrutinized, so the issues had compounded.

Turnover problems and losing key employees were certainly hard on the department, but it was not as big of a challenge as the division itself losing their commitment and accountability to ensure best business practices were being followed.  The tone at the very top was lacking – no one was setting expectations for the behavior or ethics that the community followed.  The employees felt dejected and defeated.  Ultimately, the staff forgot their purpose, their mission and vision for being there.

My point: when some employees give up and lose interest, that tone can spread like wildfire and cause significant harm.

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