November 17, 2014

I realize that the large majority of you don’t work at a casino. But, when it comes to security and fraud prevention, there are plenty of lessons to be learned from practices employed by casinos. An article posted recently by the AICPA provides five observations of controls conducted by casino personnel that can be applied in any business or organization. It is a great article for anyone starting a fraud prevention program, as well as those looking to continually improve their existing ones.

The five examples provided are very good. In and around these examples are a couple of important lessons I observed and wanted to comment on. The first brings home the need for good accounting information and a thoughtful risk assessment process. When you think of fraud that takes place in a casino, if you’re like me, you probably harken back to things like the film Rain Man, when Dustin Hoffman’s character enters the casino with Tom Cruise’s character to count cards (similar to many other scenes from many other films). There are clearly highly sophisticated schemes that are developed around this trade, and because casinos seem to make so much money on the gambling activities it is easy to forget all the other things going on inside a casino.

According to this article, gambling on the casino floor isn’t necessarily the area where the most fraud instances occur. Ancillary service centers are a target for a larger volume of fraud occurrences. You can’t just look at the big money-making parts of your business. The secondary and tertiary centers may have access to company assets and fewer controls and are therefore at more risk. Everything deserves a look when you are performing your risk assessment, and every service center needs good information to help you monitor the operation.

The other point I wanted to make is to emphasize the author’s fifth and final piece of advice. Starting anything as complicated, and likely foreign to most people, as a fraud prevention program is very intimidating. You can’t think that you will hold one meeting for a few hours, talk it all through, and then come out the other side with a well-oiled and polished program. It takes time. It will take several building blocks to get to where you want to be, so go into the process looking to place that first building block. Set a foundation and then start to build up from there. The act alone of conducting an assessment of your programs will drive a message for your staff that things are getting a closer look. Following through and building on that notion will reinforce your tone from the top.

The week of November 16, 2014, is International Fraud Awareness Week. In that spirit, open up your calendar today and schedule a meeting with your key management team to either get started on your risk assessment process, or to update one you already have in place. Like the roulette wheel or blackjack, don’t leave fraud prevention to chance. Improve your odds. Be intentional!

© Clark Nuber PS and Focus on Fraud, 2014. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Clark Nuber PS and Focus on Fraud with appropriate and specific direction to the original content.

This article contains general information only and should not be construed as accounting, business, financial, investment, legal, tax, or other professional advice or services. Before making any decision or taking any action, you should engage a qualified professional advisor.