ARE YOU RUNNING A HOTEL BUSINESS, BUT THE SALES FIGURES ARE NOTE MAKING SENSE?

Looking To Find Frauds And Abuses – What Are The Signs To Look For?

Fraud indicators are the warning signs or red flags that fraud, abuse and revenue leakages may be happening in the organisation. Looking for fraud and abuses and finding them will require the application of proven methodologies and approaches which primarily include the following:

• Pre transaction/work completion supervisory reviews or post transaction /work completion reviews
• Intentional observations by surprise visits or using undercover agents
• Business Process Reviews
• Transactions Data Analytics
• Walkthrough Discussions and interviews
• Survey administrations

Listed below are fifteen (16) typical examples of the warning signs which the hotel entrepreneurs and managers and assurance providers should know. Proper attention to these signs and taking appropriate and proactive steps to prevent, detect and deal with them timely will significantly minimize the frequency of occurrence and traumas that often come with them. occurrence.

• (1) Segregation of Duties Conflicts- Some of the hotel staff have excessive powers or rights given. One person may be responsible for performing conflicting roles. For example, one customer service staff is responsible for receiving guest, booking and check-in guests, receiving payments, cash safe keeping, bank lodgment and reconciliations. and also order cancellations and refunds.

• (2) Lack of Established Robust Standard Operating Procedures and Policies – Processes, operating procedures and policies including antifraud programmes and policies are not documented and approved by the appropriate executive management or board levels.  Staff are left to apply their discretions and experiences from legacy employments on work assignments. Where procedures have been established, documented and approved, they may not be robust, thereby creating loopholes to be explored by opportunists.

• (3) Weak Tone At The Top – Owners of the business, top level management or governance levels do not lead by examples. Rule of law, Internal policies and regulatory standards are not adhered to by the top levels and cascades down through the middle management to operational level employees. Double standard treatments and disrespect to the lower levels become pervasive. These negative practices make the work environment toxic and difficult to enforce the established processes, policies and procedures across board.

• (4) No or Weak Supervisory Oversights – Lack of adequate supervisions by superior officers on subordinates.

• (5) No or Weak independent Monitoring Functions Established – general absence of independent control monitoring and internal auditing functions either outsourced, co-sourced or in housed resourced. Where exist, work scope and results are not robust and regular. Some do not have CCTV installed and where installed the operating effectiveness is hardly checked such that when issues happen, they just realized that the images required are not available. images

• (6) Poor Employee Remuneration – Competent and committee employees are the greatest assets to any organisation. When employees are not being treated fairly, particularly when the business owners live large and lavishly, it becomes unfair for the business owners and leaders to expect commitment, dedication and bumper harvests from the employees. Most of the time, the aggrieved employees will feel entitled, and device means to remunerate themselves with the company’s assets. and the easiest available asset often used is cash.

• (7) No or Weak Feedback Mechanism– When no mechanisms to get and hear the voices of the customers, customers, suppliers and others heard through customer satisfaction survey, customer complaints boxes, whistle blowing or anonymous hot lines. IN addition, when complaints raised do not get fair and timely treatment of the complaints raised.

• (8) No or Weak Staff Personal Performance Appraisals Feedback Mechanism. – When there is no staff performance appraisal systems exist and when it exists, the feedback process is not driven by the established goals, objectives and strategic plan and annual budget of the organisation and leading practices principles. This makes the feedback results subjective and hurting,

• (9) Lack of Staff Training and Career Development Programmes : – This covers absence of training in critical areas such fraud awareness training, staff induction training on recruitment and functional areas of responsibilities, no success and promotion plans. Staff are left to use their initiatives and prior job experience and also stay in one position throughout their work life in the company.

• (10) No or Improper Automation of the business processes end to end covering the customer service operations, payment, accounting, procurement and personnel management and administration. Sometimes, when automation has been done, the wrong use or underutilization of the system functionalities may be pervasive. The hotel owners and managers should ensure that good automation starts from documenting the users’ needs, functional and technical requirements of the to be system. The requirements should be used to choose the right software and hardwater facilities and also to drive successful implementation and productive usage.

• (11) Poor Recruitment Strategy and Employment Verification Procedures happen when recruitment is not based on competence and integrity, but on “man-know-man” principles. Many of the hotel owners believe that recruitment of close relatives such as family members, friends or town people will help reduce malpractices in the organisation. Employing close relatives is good at least, it helps to retain and circulate the wealth amongst the family members. The key question is, does this really prevent frauds, abuses and revenue leakages from happening in the organisation? A very big issue with this style of recruitment strategy is that it limits diversity of knowledge, skills, competence and perspectives which often stifle innovation and growth in the organisation.

Other observable Indicators for fraud and abuses include the following:

• (12) Weak fraud risk management culture – fraud and abuse perpetrators are not often punished. Frauds and abuses are not reported but are protected or hidden.
• 13) Long hours of working and no vacation or multiple vacations are cut shot
• (14) Lifestyle not consistent with compensation levels. This includes appearance of living below or above the income.
• (15) Inappropriate behavioral patterns. Examples, include extremely boastful, arrogant, loner, extremely quite, always defensive and easily irritated.
• (16) Too much personal pressures such as having excessive and frequent borrowing.