If a service company has been around long enough, there will be some story about how someone manipulated the system and embezzled money or committed some type of fraud. The story is often anecdotal, and the longer it has been since the actual criminal event, the bigger the tale becomes. A thousand dollars becomes a hundred thousand dollars, and as time passes, a million dollars. Pinocchio would have a hard time with some of these stories of manipulation.

However, an embellished story (or not) misses the point. What’s important is how service organizations react to such events to prevent them. Executives who have been burned commit themselves to a knee-jerk reaction. Fraud, whether it happened to them directly or to another service company they read or heard about, becomes something to prevent. Audits and inspections are implemented with the executive’s hope that “this will never happen under my watch.”

In search of a solution, a predictable outcome from an audit is that too much control is put in the hands of one individual. This control can be over computer systems, processes, people, money, or any combination of these things.

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