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Welcome to Bizland News - Edition 17
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March 2003 |
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| Firstly, I have to say a BIG congratulations to my brother, Andrew, and his wife, Nikola, who became proud parents to Cameron Ann, a beautiful little girl, on Monday 03/03/03! She is the first grandchild to my ecstatic parents, as well as my first niece, so needless to say I just had to show her off! Isn't she a gem? I can't wait to fly up to Joburg to go and visit her! Okay enough before I get too broody - onto the newsletter... This month we bring you an article on why you should be on the lookout for fraud in your company, and how to prevent it. We also bring you a story of someone who is trying to make a difference and get the community | ![]() |
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Feature Article: Fraud Health
Check-up
by Mario Fazekas, Relationship Manager, Ernst
& Young Forensic Services
Deception
lies at the heart of fraud and in most cases the fraudster ends up being
a trusted, long-serving employee whose position allows him/her to steal
month after month and conceal the fraud losses for years. Your organisations
challenge is to find the soft spots or Achilles Heels that may
be allowing current fraud to occur, or that may allow future frauds to take
place.
We
have found that the effectiveness of traditional management techniques has
been mitigated by:
| | The growing dependence on computers; |
| | The increasing speed and complexity of transaction processing; |
| | The trend towards downsizing and business reengineering which have stripped away the layers of middle management conventionally responsible for prevention and detection controls; |
| | The growth in organised crime syndicate activity. |
The
result is that fraud is less detectable and as a result of an under-resourced
criminal justice system more attractive proposition to the disgruntled,
the greedy, the desperate or the opportunistic than ever before. The most
efficient and cost-effective way to combat fraud is to engage in proactive
activities designed to prevent fraud. Although the importance of reactive
strategies cannot be disputed, it is far easier to prevent it in the first
place.
Why should organisations have a fraud prevention Check-Up?
There
are 6 very good reasons
| 1. | It could save your organisation. Fraud can be a catastrophic risk. If you dont proactively identify and manage your fraud risks, they could put you out of business almost overnight. Even if you survive a major fraud, it can damage your reputation so badly that you can no longer succeed independently. |
| 2. | It could pinpoint opportunities to save you a lot of money. Fraud is an expensive drain on an organisations financial resources. In todays globally competitive environment, no one can afford to throw away the estimated 6% of revenues that represents the largely hidden cost of fraud. If an organisation isnt identifying and tackling its fraud risks, it is disadvantaged against competitors who lower their costs by doing so. |
| 3. | Fraud is now a common risk that shouldnt be ignored. The incidence of fraud is now so common that its occurrence is no longer remarkable, only its scale. Any organisation that fails to protect itself appropriately from fraud should expect to become a victim of fraud, or rather, should expect to discover that it is a victim of fraud. |
| 4. | Its the least expensive way to find out the organisations vulnerability to fraud. Most organisations score very poorly in initial fraud prevention checkups because they dont have appropriate anti-fraud controls in place. By finding this out early, they have a chance to fix the problem before becoming a victim of a major fraud. Its like finding out you have seriously high blood pressure. It may be bad news, but not finding out can be a lot worse. (Senior management is not expected to be experts on controls, but they are held responsible if effective systems are not in place. Many of the recent high-profile companies that collapsed due to alleged fraud were very good companies. What most of these companies had in common was the fact that at a time when their attention was distracted from the importance of controls, their luck ran out.) |
| 5. | Its a great opportunity for an organisation to establish a relationship with a Certified Fraud Examiner on whom they can call when fraud questions arise. Since the risk of fraud can be managed but is rarely eliminated, its likely that the organization will experience fraud in future and will need a CFEs assistance. |
| 6. | A strong fraud prevention program could help increase the confidence investors, regulators, audit committee members and the general public have in the integrity & quality of the organizations financial reports. It could also help to attract and retain capital. |
Effective fraud prevention should be a New Years resolution for all businesses - so when last did your organisation have a fraud health check up?
Mario Fazekas is a Relationship Manager with Ernst & Young's Forensic Services. For more information on Ernst & Young's EyMMUNE fraud prevention program, contact Mario on 083 6110161 or email fazekma@ey.co.za.
In Brief: Managing Your Business
Risks
by Inus Marais, Executive Director, Snyman
& Van Der Vyver
And once a business owner successfully manages to overcome all stumbling blocks and grow a healthy business, he or she should also be aware of other risks that could affect the business - namely the risk of losing it all through an outside influence like a fire, theft or storm. You must therefore also make sure that you protect those assets effectively against any damage or harm that may occur. This is where the short-term insurance industry plays its role Click here to read on.
The Franchise Advice and Information Network (FRAIN) strives to supply high quality information and support services to individuals and small business (SMMEs) to ensure growth and improvement of new and existing franchise businesses in South Africa. Click here for more information.
Budget 2003 - There is new information about the 2003 budget on our website! Click here to see all the latest!
UIF for domestics - The 1 April deadline is fast approaching! Click here for info from the Dept. of Labour.
Free Software Download - StuffIt Expander easily expands and decodes all those files you download from the Web or receive in your email. It quickly accesses StuffIt files and unzips zip files created by WinZip and other zip utilities. Just drag, drop, and you're done! Click to download.

A payroll service that is cost-effective, convenient and innovative. Bizland:
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For more information email ian@bizland.co.za.
This month's Success Story: Andre Snyman of Eblockwatch - Keeping an Eye On Success
| The idea started two years ago, purely by a chance appeal on the radio to help find a missing child. Andre Snyman, owner of a transport company in Johannesburg, heard the message and thought that there must be a way of getting this message across a network via SMS, similar to the way he kept in touch with his fleet of trucks. He |
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Andre explains the concept: members of the public sign up for the SMS service via the Eblockwatch website, and then contact a central number managed by Andre to report crimes or suspicious activity. Andre then relays this message on to an area coordinator where the activity was reported, who then sends the message onto the network via SMS, warning subscribers to be alert. Should a subscriber then, for example, see a vehicle that has recently been reported hijacked, he or she could in turn report this to Andre, who is constantly in touch with the police. The network then closes around the criminal, reducing crime in the area.
Andre believes that the service is an excellent tool for warning people about high alert zones, for example traffic lights with regular occurrences of "snatch and grabs", giving communities more control over their own safety. Eblockwatch is also endorsed by the South African Police, who receive notifications directly via their cellphones enabling them to respond faster, while the server and call centre has been sponsored by Dimension Data. Andre initially contacted various corporations for further sponsorship, however he found that they tended to take too long to make important decisions, so he decided to take control again, and now relies heavily on community funding.
Andre soon realised that the success of Eblockwatch as a community tool could have great implications for tourism. He felt that there was a need in South Africa to help tourists to feel safe at all times, and so he launched Eblockwatch's subsidiary, SA Travel Buddy, endorsed by The AA Travel Guide and the International Marketing Council of South Africa. SA Travel Buddy works in the same way as Eblockwatch, using SMS to keep in touch with tourists throughout their stay in South Africa.
Andre explains: "The SA Travel Buddy system links international visitors to local hosts as they move around South Africa. All we need to know is their itinerary - and then once the visitor arrives, they activate their membership by giving us their cell phone number, and then the relevant Buddy will keep in touch with the visitor as they travel around South Africa. The Buddy then ensures that the visitor is having a good time, offering streetwise tips, guidance, and even helping out if the visitor is in trouble." Andre believes that the service has excellent potential in creating goodwill in South Africa, and has received enormous positive feedback from visitors.
Andre highlights one of the successes as being a group of Canadian students who were in South Africa to work as volunteers in township schools. They were looked after by Eblockwatch members in Alexandra, and felt so safe that they enjoyed street parties in the evening and were entertained to a farewell goat and pap party by the Eblockwatch members when they left - a far cry from the gangs and violence that one usually associates with township living.
Eblockwatch has also received great success in combating crime, the most recent being the recovery of a hijacked truckload full of stolen tires worth R500 000, as well as apprehending a known felon wanted for the murder of seven people. Andre comments that although he struggled at first to get people involved, communities are now starting to see the bigger picture, and gain tremendous self-satisfaction and security by being able to help. He is in the process of setting up small support groups in various neighbourhoods, with a primary contact person who will alert the area network in the event of any problems.
Andre's main concern at present is the cost of the SMS's. He makes no money off the initiative, and relies on his coordinators to raise funds for their communities to continue with the program. He has found that the burden of the costs is much easier to manage if the communities agree to split the costs - so the more members the cheaper is becomes. He has high hopes for the future of Eblockwatch, believing that the more people who subscribe, the bigger the network, and the more effective it will be.
His final message: Eblockwatch is an example of ubuntu in action. I can, We can, South AfriCAN.
Andre
can be contacted on 082 561 1065 or email ryfsny@yebo.co.za.
Visit the websites at www.eblockwatch.co.za
or www.satravelbuddy.co.za.
Let us know if there is a success story that you want us to investigate, or if you have a story to share with us. Send your contributions or suggestions to success@bizland.co.za - we look forward to hearing from you.
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"Service to others is the rent you pay for your room here
on earth" - Muhammad Ali
Please send us your comments or questions to sallyh@bizland.co.za or post them on our Discussion Board.
Until next time...
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