Governance

     Recently a front page lead story in the Herald Palladium was about a $15,000 a year comptroller for a small grocery store chain who had embezzled $6.4 million dollars in the past seven years.  It seems that arrests for embezzlement appear every other month.  How the accused in this case, or the already convicted in others involving churches, local governments, small businesses and even very large corporations don't know from the beginning that their misdeeds will come to light confounds me.

     Though I do believe a much too high percentage of Americans, given the choice between stealing $50+ billion dollars over 20+ years like Madoff and then spending retirement at taxpayer expense would take that choice.

     My second thought on the matter was how poor the governance (oversight) is in many organizations on Main Street, let alone Wall Street. Here are three simple rules to follow no matter the size of the firm.
  1. If you have checks coming in the mail, the person who opens them and enters the vendor/client and amount doesn't make the deposits.
  2. Whomever closes the cash drawers doesn't do final reconciliation in the books.
  3. Budget an annual audit.  Period.
     In the non-profit sector in particular we often find boards that consist of individuals passionate about the particular issue or population served by the organization, but lacking expertise. I would say the passion for the mission, vision and values of any organization is crucial, but must be balanced by expertise in a wide variety of disciplines.  Yet training of board members to the duty and responsibility (and liability) of their oversight is slim and in many cases poorly done if at all.  Certification of qualified board members doesn't really exist.

     A number of years ago I created the chart below pertaining particularly to non-profit governance as part of the trainings I do for boards of directors. You might run a cross check to see how any non-profit you volunteer for stands up against the expected standards.  The books listed at the top can easily be found at Amazon and a couple in many libraries.


     This chart also can easily apply to for profit businesses of any size.  If you want a copy of the purely academic paper (which hasn't been updated to a white paper yet) email me at jonrwallace@yahoo.com and I'll send you the Pdf.

     Good luck getting your losses back folks.  Last I knew the pay rate for inmates wasn't that good but the cost to the rest of society was around $50,000 a year per.

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