Mr. Goldmann

Security & Safety

Hotel Financial Security: Are Your Vendors Real?

By Peter Goldmann, President, FraudAware Hospitality

Despite the constant barrage of news about corporate theft and fraud, there are still far too many situations in which hospitality companies unknowingly pay criminally-minded individuals or phony companies posing as legitimate vendors.

How is it possible that "legitimate" companies have a private mailbox at the local UPS Store, a private residence, or even a prison address? Or that invoices a month apart with consecutive numbers both get paid? Or "invoices from a "vendor" whose address happens to match that of a company employee get paid?

To avoid such frauds your company must have in place tight controls for the...

Vendor Master Set-Up

The Vendor Master set-up process requires appropriate-and continuously enforced-segregation of duties.

Details: The individual or department authorizing a vendor should be in a department other than that of the team processing invoices and generating disbursements.

When establishing segregation of duties for the Vendor Master set-up, Christine Doxey, Vice President of Account Management at Apex analytix, a leading recovery audit consulting firm urges companies to include employees who are responsible for the business process and those who are provided with systems access.

Caution: Even where it may appear that segregation of duties exists, ensure that system access is controlled to allow use only by individuals authorized to process specific transactions.

In addition to the red flags of fraud mentioned above, says Doxey, any of the following details appearing in your payables process could indicate that your Vendor Master set-up process is vulnerable to financial abuse...

Additional controls to consider for the Vendor Master set-up process include:

Essential final step: Require vendors to complete a vendor profile form that provides information that further increases your ability to verify their legitimacy.

With a vendor profile, the vendor is required to provide certain documents that include sales tax certificate, city business license, names of key officers (to screen for conflict of interest), physical business address, daytime phone number, and other confirmable data. Example of a vendor profile form...

Continuous Monitoring

The process of continuously monitoring vendor transactions includes a review of the controls as noted above for the Vendor Master set-up process. The review should include selecting a sample of vendors as well as reviewing the supporting documentation for the validation of new vendors or changes of address.

All system-generated audit reports must be reviewed - not only for segregation of duties, but to determine if a vendor address has been fraudulently altered and then immediately changed back to the original address.

Important: Review invoice attributes throughout the process to determine if specific vendors may be perpetrating fraudulent activities. Common suspicious attributes...

Critical added control: Vendor Master clean-up. As part of its continuous monitoring process, the company should periodically review all duplicate vendors and initiate a vendor master clean-up procedure.

The clean-up process will alleviate duplicate vendors that have been set-up for the same vendor at the same address.

Example: There could be a slight difference in spelling or the use of abbreviation.

Key: It is much easier to control a smaller vendor master than a large one.

The Power of Real-Time Continuous Monitoring

Continuous monitoring on a real time basis quickly identifies potentially fraudulent vendors and determines whether your Vendor Master set-up controls are working properly. If there is a concern about a specific vendor, raise the issue with your internal controls or internal audit department after performing an evaluation of internal controls within the procure-to-pay process. If a control weakness is identified, immediately adjust the control and increase the sample size of the test. To choose the right continuous monitoring software vendor:

Peter Goldmann is the Developer of FraudAware/Hospitality, the first on-line fraud awareness training course for hospitality managers, supervisors and line employees. He is is the publisher of the monthly newsletters, White-Collar Crime Fighter and Cyber-Crime Fighter. His company, White-Collar Crime 101 LLC also is the developer of FraudAware/Hospitality, a customizable Web-based fraud awareness training course for managers, supervisors and line employees. He is a member of the Association of Certified Fraud Examiners, and The International Association of Financial Crimes Investigators. Mr. Goldmann can be contacted at 203-431-7657 or pgoldmann@wccfighter.com Extended Bio...

HotelExecutive.com retains the copyright to the articles published in the Hotel Business Review. Articles cannot be republished without prior written consent by HotelExecutive.com.

Receive our daily newsletter with the latest breaking news and hotel management best practices.
Hotel Business Review on Facebook
RESOURCE CENTER - SEARCH ARCHIVES
General Search:

APRIL: Cultivating Guest Satisfaction and Retention

Simon Hudson

According to the Oxford Dictionary an apostle is a “vigorous and pioneering advocate or supporter of a particular policy, idea, or cause”. For hotels, creating apostles should be a priority. They are the most loyal customers and they are so satisfied that they want to convert others to share their experiences. But how do hotels create apostles? This article looks at how some hotels around the world are delivering not only superior products and services, but through customization and personalization are creating guests who would not dream of staying anywhere else. READ MORE

Edward Reagoso

In the hustle and bustle of being accountable for so many facets of the hotel business, a hotel general manager needs to do one thing to truly secure his or her future in our industry, that being “insuring your team members truly care about your guests stay.” Sounds simple enough, right? This is not rocket science and I mean no disrespect to anyone struggling with operations or sales issues that can often seem surmountable. We all have these problems at one time or another. There are resolutions to every issue we have. The resolution to any problem is really just a matter of applying a specific strategy that will minimize the issue or frankly, make it go away completely. How many times have you walked into a situation with a guest that was surprised and upset that a tiny issue was never dealt with by a front desk agent, housekeeper, waiter, maintenance person, or even a manager that worked for you? I have too, the important thing is that we learn from this and move forward. One must insure everyone on our team grasps the importance of caring and the application of certain techniques can solidify a culture. Getting everyone on your team to care about your guests really is the key. READ MORE

Rick Garlick Ph.D.

A primary objective of hotel operators is to keep their properties full of ‘heads in beds’ to capacity. While this goal is understandable, there is a risk hotels may market themselves indiscriminately and draw guests that are not a good match to their particular value proposition. While this meets a short term goal of wasting as little inventory as possible, there is a longer term risk that these guests may provide negative feedback about their stays, even though the hotel was being true to its own identity and branding. Indeed, the guest experience cannot be fairly evaluated apart from the expectations and preferences a person brings to the hotel from the time he or she books a room. Using a comparative restaurant example, a top steakhouse could never deliver a satisfying experience to a committed vegetarian, even if it provided the best cut of meat and the most attentive service. You have to like steak to positively evaluate the experience. READ MORE

Aaron  Housman

Things will go wrong. It’s inevitable in life and in business. And the sooner one gets to that conclusion the sooner he can get on with what comes next: preparing for the inevitable. In the hotel business that means following up with guests when the experience is substandard for any number of reasons, from guest service to property maintenance to the type of sheets on the bed. But there is a difference between just preparing for the inevitable and being well-prepared. Following up effectively with upset guests doesn’t happen accidentally. It is planned, trained tracked and executed every day. It is a way of life for best-in-class operations. READ MORE

Coming Up In The May Online Hotel Business Review


Feature Focus
Hotel Sustainable Development: Integrating Practices for the Environment and the Bottom Line
The term “sustainable development” was first coined in 1987. In a report entitled, “Our Common Future,” the Brundtland Commission defined sustainable development as follows: “Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” This definition immediately caught on. In the business world, it is sometimes referred to as a triple bottom line – capturing the concept that investments are profitable, good for people and protective of the environment. Within the hotel industry, companies have taken an active role in committing themselves to addressing climate change and sustainability. Hotel operations have realized that environmentally sound practices not only help the environment, but can lead to cost reductions, business expansion, and profit growth as consumers increasingly seek environmentally sustainable products and services. In a recent survey by Deloitte, it was noted that 95% of respondents believe that the hotel industry should be undertaking “green” initiatives. Additionally, 38% of respondents said they made efforts to identify “green” hotels before traveling, and 40% said they would be willing to pay a premium for the privilege. These results suggest that consumers want and expect sustainability in their travel plans. In response to these trends, many hotel companies and on-line travel agencies have even begun offering their consumers an opportunity to purchase carbon offsets to reduce the environmental impact of their trips. The May issue of the Hotel Business Review will document how some leading hotels are integrating sustainability practices into their hotels and how their operations, consumers and the environment are profiting from them.