Internal controls come in all kinds of shapes and sizes. For example, training, awareness, and reporting all have an element of control embedded in them. When we’re tasked to do something, we have an obligation to ensure that it’s done correctly, right?
This month, I want to share a story about obligation. Obligation is a commitment. It’s your word to do what’s right – morally and/or legally.
An organization was contracted for the construction of a building. During the negotiations, all parties said they understood what was to be done – what the finished product should look like and what the contract required. But during construction, several folks noticed moisture issues and mold, but instead of reporting and/or identifying and correcting the issues (their obligation), the employees continued the work on their own checklists and chose to conceal the problem and not address the issue. They were cutting corners and not doing what was necessary or right.
During an inspection, mold was found, and it was initially accepted as a small factor that occurred with the new construction. However, as more complaints, issues and problems surfaced, a review was ordered. Folks began to talk and point the proverbial finger. The sub-contractor for the electrical and plumbing admitted that they saw traces of mold during their work, but felt it wasn’t any big deal – they were used to seeing it. To the subcontractor, this type of mold was just a part of the construction process – that was their justification. The HVAC folks were interviewed next and also admitted that some employees had notified them of moisture problems. However, they were told by the site manager that the mold was related to a foundation matter that was under repair. As far as the HVAC people were concerned, the foundation work wasn’t their problem and so the mold wasn’t their responsibility. Lastly, the insulation team was interviewed. The insulation was done by a very inexperienced group and the management admitted that when they installed the insulation, they were only concerned about the end product of their part of the process – so they overlooked the mold and went to work to meet their deadlines. Once the insulation was in, the mold was out of sight and out of mind.
Did you notice all the folks that realized that there was a problem, but didn’t take action?
The building was inspected upon completion and inspectors were surprised to find out that the insulation was damp. They dug further and discovered water was being absorbed through the foundation leak and into the insulation, which seeped it up and drew it further into the walls. Furthermore, the HVAC system was causing condensation issues because of the units battling humidity issues from the water particles in the air (from the leak). All of these elements attributed to the formation of mold, and now the environment was a perfect recipe for disaster.
Throughout the review, there was a reoccurring theme of neglect of duty. Either folks felt they weren’t obligated to say anything, or they hadn’t had training that made them believe it was their job to detect or remedy problems. In some cases, the breakdown occurred because there there wasn’t a proper chain of reporting when such issues arose, and in other cases – some folks were directly told to not disclose or talk about issues if the issue didn’t pertain to them.
In the end, I come back to that term “obligation” and to that old saying, “Right is right and wrong is wrong.”
When you say you’re doing something, you have to do it and do it right. We have to train folks on identifying issues that might fall outside of their job description and then have a system in place to properly report those instances. We need to create an environment that embraces the proper reporting of issues and take corrective action.
Remember, training, awareness, reporting, and creating an environment that embraces people who recognize and report issues is a valuable internal control.