When we broach the topic of unexpected disasters, such as natural disasters and employee theft & fraud, the most common line we hear back is “Oh, that’ll never happen to me!” It’s astounding that more firms are not prepared and ready to ensure business continuity should an unforeseen event arise. While we hope that you never go through one of these events, you’ll be better off if you prepare now.
If you live in an area impacted by natural disasters, have a plan in place for your home and family. You might have a hurricane kit and shutters on your windows, a shelter filled with supplies, or an evacuation plan in place. You carry the appropriate insurance and you have a plan to pick up the pieces should something happen. Anyone with a bank account and credit cards has likely been a victim of fraud, has made fraud protection a priority when choosing a bank or new credit card.
But even if you don’t live in an area commonly known for significant weather events, or haven’t yet experienced a form of identity theft & fraud, disaster can strike at any time, in any form. You may be prepared for these events in your personal life, but how would your business fare?
While it is not good to live in a state of fear, you can minimize the impact to your business. Make sure you have a disaster recovery plan and are taking steps to detect and deter employee theft and fraud.
The stories below were submitted by accounting professionals, names have been omitted to protect the privacy of the individuals involved.
Saving the Server from a Wildfire
A client in California was near a string of wildfires and one of the fires came into her town. She sent her husband into town to get the server from her office. She didn’t have her documents and applications in the cloud, if she lost her server, she would lose her business.
Death of a partner
A client running a business as a partnership experienced the death of one of its partners. The surviving partner had been primarily involved in sales and the deceased partner was in the operations side of things. There was no cross-functionality in their relationship. They essentially ran their business in silos. It was not until the death of the one partner that the other partner found out that theft had been occurring to the tune of thousands of dollars and that the business had not been tracking inventory properly. The surviving partner dealt with emotional trauma while also trying to “right the ship” in areas he had no knowledge or expertise.
Payroll tax trouble
I had a client who was faced with paying for delinquent payroll taxes as well as the associated legal fees. This disaster was the result of the business owner being too hands-off. He relinquished payroll control to his Chief Operating Officer. This individual committed payroll fraud, costing the company more than $100,000 and a great deal of emotional trauma (which you can’t put a price tag on). My client could have avoided this by having the proper controls and verification systems in place. Instead, he had a very unpleasant surprise when the COO intercepted an IRS notice about unpaid payroll taxes.
Dawn Brolin’s own philosophy about disaster preparedness
Whether it’s a fire, an adverse weather event or even a potential theft situation, my own Disaster Recovery Plan (DRP) is simple: Have every single essential piece of documentation in the cloud and make sure you have business interruption insurance. This two-prong approach provides priceless peace of mind because should anything happen to my physical office, I know that my work will not skip a beat. I will have all my client documents and personnel information available and I can always replace any equipment or physical goods in the office with an insurance claim.
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