1. News
BARBADOS BUSINESS AUTHORITY Monday, November 24, 2014 3
stories by Shawn
Cumberbatch
Barbadian businessman has
confessed to losing $3
million in the last two
years through the
fraudulent actions of a
now former employee.
And the revelation made to a
regional certified fraud examiner and
internal control auditor last week in
Barbados has prompted that expert to
warn local company bosses that the
same thing is probably happening to
them, even if not on the same scale.
BDO Forensic Accounting Limited
director Stephon Grey was here last
week as one of the presenters at a
two-day seminar on fraud
management and control hosted by
the Barbados chapter of the Institute
of Internal Auditors at Accra Hotel.
After his encounter with the local
businessman whom he did not name,
but said he was “considering getting
out of business”, Grey was even more
convinced that Barbadian companies
needed to invest in internal auditors.
“One business owner came up to
me and said over the last couple of
years he discovered he lost over $3
million and he didn’t have an internal
audit function. That’s a lot of money.
He discovered that and one person in
his organisation was arrested but he
didn’t follow through with pressing
charges, so that is an example,” Grey
said.
“He was making losses [and] he
didn’t know why. As a matter of fact,
she had most of his stock at her
home. It is a lot of money. He is even
considering getting out of business, so
that is the quandary the private
sector finds itself in.”
The Trinidadian, who has audited
firms in various places including
Barbados, St Kitts, Suriname,
Jamaica, Grenada, Guyana, Trinidad
and Tobago, Columbia, Miami and
New York, said while companies
always said they had “internal
controls”, the fact that many of them
were still being hurt by fraud “is
telling us that internal controls are
sort of outdated, and have to be
increased to anti-fraud controls.”
“A lot of businesses don’t have the
complement of the internal audit,
meaning that most organisations may
have one or two auditors in the audit
department; that may be insufficient.
The reason why they don’t invest in
internal audit is because they don’t
see the cost benefit analysis,” he
explained.
“If you know you are losing $1
million you don’t have no problem
spending $200 000 to protect it, so
the question is whether or not they
know what is going on. So the banks
and the regulatory bodies, the
financial institutions, they have an
obligation to ensure that they are
staffed up in terms of compliance and
so on....”
“At least have an internal audit
function, even if you start off with
one person and see how it goes. Once
businesses see the benefit of it they
will spend more money on it.
A new survey released by United
Nations Economic Commission for
Latin America and the Caribbean
(ECLAC) has tied any Barbados
economic rebound next year to
“continued positive performance of the
global economy in general, and its
specific trading partners in
particular”.
However, the report – titled
Economic Survey Of The
Caribbean 2014 – also said, “Success
will depend on the willingness of the
key social partners of the Government,
the private sector and labour to rally
together in order to re-engineer the
economy.
“The Barbados Government has
acknowledged the need for significant
structural reforms in order to rekindle
economic growth. Through the
measures in its new medium-term
growth and development strategy, real
efforts at economic adjustment have
already begun.”
ECLAC’s team concluded that
“short to medium term challenges will
continue to be the high fiscal deficit
and a large public debt”.
“The country has however shown
maturity as it begins this economic
adjustment, with all social partners
fully committing to the process.
Growth is expected to be 0.5 per cent
for 2014, with a possible improvement
to two per cent in 2015,” it added.
The report said Barbados’ difficult
economic conditions “were reflected in
the trend in domestic inflation, which
fell to 1.8 per cent from 4.5 per cent
between 2012 and 2013”, while
unemployment also increased as
Government’s retrenchment
programme took effect.
In terms of the its outlook for the
region, ECLAC said its main findings
were that “while the Caribbean still
faces a number of fiscal challenges it
is anticipated that the situation will
improve with positive growth over the
medium term”.
“At the same time, unemployment
rates, especially for the service-based
economies, are relatively high and
continue to increase slowly in some
cases. The survey also finds that
inflation rates are relatively low,
which has a positive impact on fixed
income earners. With respect to
investment, the domestic private
sector remains risk averse as credit to
this sector has been increasing slowly.
At the same time, public sector credit
has declined, in part due to a number
of programmes aimed at constraining
the public sector,” it said.
“Better economic performance is
projected in 2014 and 2015, due to
improved performance of the major
export markets, the United States and
Europe, and improved domestic
investment.
This is likely to increase
employment and domestic demand,
which have been depressed in the face
of fiscal consolidation measures.
Thieves in
our midst
STEPHON GREY (GP)
Study links recovery to world economy
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