Financial Fraud and How to Reduce Your Risk
By Peter Goldmann President, FraudAware Hospitality | March 31, 2010
For companies that don't believe they have a serious fraud problem...or simply choose to ignore the subject altogether, consider this: According to the Association of Certified Fraud Examiners in Austin, TX, the average American company loses 6% of its annual revenue to internal fraud. In other words, a hotel or resort company with, for instance, $1 billion in annual revenues, loses $60 million to employee embezzlement...expense account fraud...theft of inventory, etc.
FINANCIAL CRIME: OPPORTUNITIES GALORE
Among the leading reasons that hospitality companies are exposed to high levels of fraud is that the industry's culture tends to focus much more on providing great customer service than on the internal financial controls that go into running a hotel, resort or restaurant.
No problem with that, right? Better customer service equals more repeat business, means bigger profits and so on.
All well and good, except that this approach comes with a hefty price.
According to Robert W. Rudloff, Jr., vice president of internal audit at MGM Mirage in Las Vegas, when line employees, supervisors, managers and senior executives are focused so narrowly on getting customers to come back, internal financial controls inevitably get short-changed.