By Joanne Newman on 12th March 2016
System audits are not done to get rid of managers or to catch them out on something. They are about working with the club manager and committee to prevent fraud and make it easy to identify when it does happen. System audits:
• Make things more transparent. Transparency is the best way to stop tongues wagging and finger pointing when the till does not balance or some stock goes missing.
• Establish a clear money trail. You should be able to track the flow of every dollar that passes through the Club. I call it a money snail trail.
• Make sure things are done efficiently by using the latest technology.
All clubs should have their management systems reviewed at least once every three years. That review will reveal any holes that can be exploited and bring things up to speed with technology. It will also reveal which systems are not being put into practice. In my view committees are not doing their stewardship role properly if they are not regularly reviewing their systems.
I have been doing system audits for +15 years. In every case theft has been reduced as a result – would be thieves know things are so tight they won’t get away with it. The audits I do are a three to four day process. At the end of it I prepare a written report which I deliver in person to the committee. That report is a detailed analysis of:
– Your systems weaknesses,
– The risk areas, and
– How those risks can be reduced.
And as importantly, it’s no use having a systems audit done if it’s not put into practice! I follow up to make sure it is. I have the advantage of looking at a clubs accounting and control systems as an outsider looking in. Sometimes fresh eyes will see the tell-tail signs in the behaviour of a staff member or a manager that those working within the club cannot see. I come in with no preconceptions and without any relationships that may influence my judgment.
Joanne Newman is New Zealand’s leading authority on club accounting and forensic auditing. She is the managing director of Club Accounting & Investigations Ltd and Smart Business Centre (Tauranga) Ltd.