By Jim Marasco, CPA, CIA, CFE

After 9/11, an interesting trend started occurring – public officials came to realize that they alone cannot safeguard this country. Whether all of them bought into the concept is unsure, but the public’s help started playing a larger role and it’s started to pick up steam.

The Boston Marathon

The recent attack at the Boston Marathon further exemplifies this phenomenon. After law enforcement pieced together evidence and collected surveillance photos, they decided to release them to the public for help. Almost immediately, they learned the perpetrators’ identities, where they shopped, where they lived and everything else they needed to know to apprehend those responsible.

It’s All Around Us

Whether we realize it or not, most of us are playing a vital role every day. It’s become so commonplace; most don’t give it a second thought. There’s a good chance you’re helping to safeguard your own company or members of the general public without realizing it. Next time you walk through an airport, look and listen. Over the intercom, you’re asked to report any abandoned bags or suspicious activity to security personnel. When you purchase coffee or donuts, observe the register. Many fast food concepts will have a placard at the register that reads something similar to, “If we don’t provide a receipt, it’s free” or some less generous ones may state, “If a receipt isn’t offered, please contact management at 1-800-…..” The catch is they’re using you to watch their employees. They want to ensure every sale gets tendered into the register. Forcing a receipt to be generated assures management that all sales are being recorded. And you just thought they were concerned about your expense report documentation! As you watch TV in your family room, take special note of the commercials from cable or insurance companies addressing fraud. The commercials are educating the public about the issue, how to spot it and the impact it has on all of us. More importantly, they instruct the viewer how to report suspected allegations.

Occupational Fraud

The Association of Certified Fraud Examiners reports in their 2012 Report to the Nation that organizations lose approximately 5% of their revenues to occupational fraud (fraud in the workplace), with the median loss at $140,000 per occurrence. As we peer back a decade ago, we learn that most fraud was discovered accidently. In 2002, with the passing of Sarbanes-Oxley legislation, hotlines became mandatory for public companies. This concept has caught on in the private sector as well. Fast forward to today and hotlines are the most prevalent source of how frauds are discovered by organizations. They’ve migrated from a voice recorder at the end of an 800 number to live trained operators and detailed web-based reporting systems. Companies are not only encouraging their employees to report anomalies, but their vendors and customers as well. As a result, incidents involving financial fraud, human resource infractions and HIPAA privacy concerns are becoming exposed, whereas in the past, they may never have surfaced.

Technology

Technology has accelerated the evolution of this process. A few months ago, while traveling in the Southwest, my associate and I both received unsolicited text messages from our phone carriers alerting us to a regional Amber alert. The same message was being broadcast on the electronic highway information screens in the area. Cell phone companies are alerting their customers to public safety notices like this automatically if you’re in the area affected. Law enforcement has discovered it’s a lot easier to find a particular vehicle with a few hundred thousand private citizens being vigilant versus just relying on a few public servants.

Getting Everyone Involved

The most effective organizations in soliciting help are those that work hard to educate the potential users. If the objective is to safeguard procurement process, then it pays to educate your vendors or bidders of your rules and regulations. If they happen to spot something abnormal, they need a means to report it into someone independent within the organization. Employees should be taught the difference between fraud, waste and abuse, in addition to what constitutes tolerable behavior. A strong tone at the top should be displayed and expectations clearly communicated. Employees need to be informed of the possible consequences to the entire organization resulting from the fraudulent actions of a few. The general public is no different. Today, there are more than 150 million smartphones in the U.S. alone. People are walking around with hand-held cameras, video recorders and the Internet at their fingertips. All of them could be a resource to help thwart fraud and crime. To tap this resource, there are three important components:

• Alert individuals to the specific red flags or warning signs you are concerned about
• Provide a means to report the allegations
• Inform them of the consequences of inaction and the potential impact it could have on them

Safeguarding Your Organization

As you work to safeguard your organization from various risks or the citizens you may be tasked to protect, don’t lose sight of the most important resource out there – the public. Let them help be your eyes and ears. Give them an easy way to report suspicions and act upon those signals. It may just be the most cost effective tool you’ll encounter. Pubished in the Daily Record, July 2013