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Australian Financial Review : October 17th 2006
FBA 047 Wanted Recruitment Businesses Blue or White Collar Recruitment Services and Agency Contracting Trojan Workforce, a significant Australian recruitment company, is looking to strengthen its position within the blue and white collar segments of the recruitment market. As a consequence, acquisition opportunities are sought to support this objective. It is envisaged that the preferred acquisitions would currently have an established client base in Sydney, Brisbane, Melbourne, Adelaide or Perth. Please send expressions of interest, marked Recruitment Acquisition to: Michael Cherry Managing Director Trojan Workforce Group 22 Bridge Road Glebe NSW 2037 Or alternatively, call for a confidential discussion with our Managing Director, Michael Cherry. All information will be treated with the utmost confidentiality. Tel: 02 9692 9155 | Fax: 02 9692 9477 | Email: firstname.lastname@example.org For Sale -- Broadband telephony business -- VoIP Get into this growing market now and watch this business take off! • Fully functional: currently billing 10k minutes daily to 500 customers across B2C, SoHo and SME segments; • Could handle 100,000 customers now; • See further www.kmoo.com.au Existing shareholders have to concentrate on other interests -- all offers considered. This business will be sold by 30 October! For more information contact: Damon Hurst Hurst EMS email: email@example.com Phone: 08 6263 0400, 0413 615 563 The Australian Financial Review www.afr.com Tuesday 17 October 2006 47 Enterprise SMEs Finance options Edited by: firstname.lastname@example.org Edited by Mark Fenton-Jones and Damien Lynch Small business step Under the federal government's Skills for the Future package, worth $837 million over five years, apprentices will be eligible for vouchers valued at up to $500 as contribution towards the costs of accredited small business training. Newsletter platform The Australian Small Scale Offerings Board, which provides a platform for direct investment in promising unlisted small and medium businesses, has issued its second Equity e-newsletter. The board is wholly owned by Quantum Business Securities on the Gold Coast. Grants for innovators An Australian not-for-profit company responsible for operating the .au domain, .au Domain Administration Ltd (auDA), awarded a total of $275,000 in grants to 16 Australian not-for-profit internet innovators. Award support continues The Greater Western Sydney Economic Development Board is to continue to support the 2007 Western Sydney Industry Awards. Eleven in the running Eleven Australian companies have been chosen as finalists for the UK Trade & Investment 2006 International Business Awards, which recognise enterprises successfully investing in the UK. Australian investment projects in the UK rose by more than 25 per cent in the past year. Read all about it The Australian Newsagents' Federation has received a federal government grant to conduct a series of national workshops for newsagents and other small business retailers on the Work Choices legislation. Victorians going west The Small Business Development Corporation reported that 845 people have registered their interest in moving to Western Australia as a state government campaign enters its third week. Most interest has come from Victorian couples aged 21 to 30. When family is a dirty word It is important for family businesses to implement preventive fraud controls. Photo-illustration: KARL HILZINGER Mark Fenton-Jones KEY POINTS Fraud in a family business has an impact at an emotional level. A person marrying into a family automatically earns a level of trust. A $2 million fraud committed by the trusted member of a small family business has prompted an adviser to warn family businesses to imple- ment preventive fraud controls. The business's owners asked Brisbane-based BDO to investigate the extent of the fraud. BDO discovered that the owner's son-in- law, who was made financial con- troller soon after marrying into the family, had ripped the business off for $2 million over five years. BDO did not divulge the name of the business but confirmed police are investigating the matter. A partner at the practice, Lisa Bundesen, predicted it would take the business six to seven years to recover from the fraud. But unlike for most small businesses, the impact will be wider at the emotional level. ''Things like that can rip a family apart,'' Ms Bundesen said. BDO released a statement follow- ing this assignment advising family businesses to implement controls across the business rather than singling out individual positions or non-family members. ''Employees don't want to see that they are being treated differ- ently,'' Ms Bundesen said. She said fraud is committed within family businesses by direct blood relatives and those who have joined the family through marriage. ''What often occurs in family businesses is that a person marrying into the family and working in the business automatically earns a level of trust,'' she said. ''As segregation of duties is often difficult in smaller family businesses, family members are often given far-reaching powers which, in some cases, are abused.'' Ms Bundesen said it is important for family businesses to implement preventive fraud controls. ''Many family businesses either don't consider the possibility that a family member could commit fraud against them or are worried about sending messages to other family members that they do not trust them.'' At the practical level, the joint managing director of Verifact Inves- tigations, Jarrod Bowditch, recom- mended that businesses establish confidential employee risk registers to monitor the potential for fraud. Mr Bowditch , a former undercover police officer, said risk registers could identify people consistently close to company losses. ''It is used to alert management,'' he said. But he warned that information in the register cannot be divulged and could be used only for ''employee position adjustment'' to reduce fraud exposure. ''The information cannot be used punitively, as it is merely an indi- cation,'' he said. ''The accuracy of the indication only becomes appar- ent with the passage of time.'' Other ways to combat fraud include multi-skilling and rotating staff through several positions to minimise collusion to defraud and improve the chances of early detection of fraud or corruption. Multi-skilling was particu- larly important for finance and administration employees. ''Never have only one person skilled enough to take charge of the accounts and always make sure staff in that area take leave when it is due,'' Mr Bowditch said. Allowing accounts staff to delay leave for extended periods gave an opportunity for fraud to occur and remain undetected. Another fraud prevention measure was the use of random audits to increase fear of detection. ''Internal auditors and employee training departments should have respons- ibility for identifying broad areas considered susceptible to fraud and for introducing controls to counter and monitor suspected fraudulent activity,'' Mr Bowditch said. ''Management and staff need to know the different types of fraud that can occur in a workplace, how to detect them and best practices for prevention.'' A partner in the forensic practice of Deloitte, Frank O'Toole, recom- mended that family businesses have a formal written agreement saying what action would be taken if fraud were detected. He noted that pre- vention and detection methods such as spot audits and data analysis, which can pick up strange activity, are even more important for small family businesses that might not be able to segregate responsibilities. ''The biggest problem family busi- nesses have is that there is little segre- gation of duties around the key fin- ancial processes,'' Mr O'Toole said. Typically, the type of family business that suffers fraud has grown rapidly but not implemented proper corporate governance measures as it got larger. Mr O'Toole described most of the family business frauds he investi- gated as ''unsophisticated''. Examples included an accounts payable clerk in a 40-staff West Australian business paying himself $400,000 as a vendor to the business. A larger fraud involved a payroll clerk setting up 12 ghost employees who were paid a total of $1 million over seven or eight years. Mr O'Toole and Ms Bundesen said family businesses are more aware of the need for robust, corporate governance structures than five years ago. And it is this awareness that is throwing up more cases of fraud, rather than family businesses falling victim to a sudden rise in criminal activity.