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Control and Management of Disasters

The problem of control is present in all treasury functions and may be of greater concern today than in previous eras. This is due to several reasons:

• Staff downsizing, which compromises the separation of accounting and financial duties

• Technology advances, with an accompanying explosion in the exchange of data through interfaces supported by computers, telecommunications, and the Internet

• A general crisis in corporate governance, as employees, stockholders, and customers watch trusted institutions fail to protect the integrity of the financial system

• The failure of business to assign responsibility for protecting the most important “new” economy resource—not cash nor any physical asset—but intellectual capital

Employees

Employees represent a significant treasury threat, as they are inside the organization, know the security measures utilized in most areas (or lack of security), and may be difficult to detect in any wrongdoing. They may be hostile for various reasons, such as a perception of injustices against themselves or their colleagues, the desire for financial gain, “the challenge,” or simply boredom. Bank products discussed throughout this book work well when properly administered, but may be circumvented by a determined individual and/or collusion.

Defenses against adverse employee actions include the following:

• Hire responsible, trustworthy employees, including clerical workers who may be selected or transferred to treasury with minimal background checking. It is the office staff with access to treasury information systems that can commit theft or fraud. Bonding of employees in positions with significant fiscal responsibility is a popular trend.

• Monitor employees who are in sensitive positions for changes in behavior or attitude due to financial problems, family strain, addictions or psychological illnesses, or other stresses. The format can be simple observation (e.g., conspicuous spending, personal telephone calls, workplace absences, changes in physical appearance) to more structured programs, such as mandatory personal financial statements and periodic medical exams.

• Although it may be distasteful, consider electronic surveillance of telephone calls and e-mail messages. Court findings are inconsistent as to whether employees can be subject to such scrutiny, as the law is still developing on privacy rights, although, increasingly, courts are ruling in favor of companies’ right to monitor employee use of company-owned computers.

Taken From : Essentials of Managing Corporate Cash

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