News

BARBADOS BUSINESS AUTHORITY Monday, November 24, 2014 3

stories by ShawnCumberbatch

Barbadian businessman hasconfessed to losing $3million in the last twoyears through thefraudulent actions of a

now former employee.And the revelation made to a

regional certified fraud examiner andinternal control auditor last week inBarbados has prompted that expert towarn local company bosses that thesame thing is probably happening tothem, even if not on the same scale.

BDO Forensic Accounting Limiteddirector Stephon Grey was here lastweek as one of the presenters at atwo-day seminar on fraudmanagement and control hosted bythe Barbados chapter of the Instituteof Internal Auditors at Accra Hotel.

After his encounter with the localbusinessman whom he did not name,but said he was “considering gettingout of business”, Grey was even moreconvinced that Barbadian companiesneeded to invest in internal auditors.

“One business owner came up tome and said over the last couple ofyears he discovered he lost over $3million and he didn’t have an internalaudit function. That’s a lot of money.

He discovered that and one person inhis organisation was arrested but hedidn’t follow through with pressingcharges, so that is an example,” Greysaid.

“He was making losses [and] hedidn’t know why. As a matter of fact,she had most of his stock at herhome. It is a lot of money. He is evenconsidering getting out of business, sothat is the quandary the privatesector finds itself in.”

The Trinidadian, who has auditedfirms in various places includingBarbados, St Kitts, Suriname,Jamaica, Grenada, Guyana, Trinidadand Tobago, Columbia, Miami andNew York, said while companiesalways said they had “internalcontrols”, the fact that many of themwere still being hurt by fraud “istelling us that internal controls aresort of outdated, and have to beincreased to anti-fraud controls.”

“A lot of businesses don’t have thecomplement of the internal audit,meaning that most organisations mayhave one or two auditors in the auditdepartment; that may be insufficient.The reason why they don’t invest ininternal audit is because they don’tsee the cost benefit analysis,” heexplained.

“If you know you are losing $1

million you don’t have no problemspending $200 000 to protect it, sothe question is whether or not theyknow what is going on. So the banksand the regulatory bodies, thefinancial institutions, they have anobligation to ensure that they are

staffed up in terms of compliance andso on. . . . ”

“At least have an internal auditfunction, even if you start off withone person and see how it goes. Oncebusinesses see the benefit of it theywill spend more money on it.

A new survey released by UnitedNations Economic Commission forLatin America and the Caribbean(ECLAC) has tied any Barbadoseconomic rebound next year to“continued positive performance of theglobal economy in general, and itsspecific trading partners inparticular”.

However, the report – titledEconomic Survey Of TheCaribbean 2014 – also said, “Successwill depend on the willingness of thekey social partners of the Government,the private sector and labour to rallytogether in order to re-engineer theeconomy.

“The Barbados Government hasacknowledged the need for significantstructural reforms in order to rekindleeconomic growth. Through themeasures in its new medium-termgrowth and development strategy, realefforts at economic adjustment havealready begun.”

ECLAC’s team concluded that“short to medium term challenges willcontinue to be the high fiscal deficitand a large public debt”.

“The country has however shownmaturity as it begins this economic

adjustment, with all social partnersfully committing to the process.Growth is expected to be 0.5 per centfor 2014, with a possible improvementto two per cent in 2015,” it added.

The report said Barbados’ difficulteconomic conditions “were reflected inthe trend in domestic inflation, whichfell to 1.8 per cent from 4.5 per centbetween 2012 and 2013”, whileunemployment also increased asGovernment’s retrenchmentprogramme took effect.

In terms of the its outlook for theregion, ECLAC said its main findingswere that “while the Caribbean stillfaces a number of fiscal challenges itis anticipated that the situation willimprove with positive growth over themedium term”.

“At the same time, unemploymentrates, especially for the service-basedeconomies, are relatively high andcontinue to increase slowly in somecases. The survey also finds thatinflation rates are relatively low,which has a positive impact on fixedincome earners. With respect toinvestment, the domestic privatesector remains risk averse as credit tothis sector has been increasing slowly.

At the same time, public sector credithas declined, in part due to a numberof programmes aimed at constrainingthe public sector,” it said.

“Better economic performance isprojected in 2014 and 2015, due toimproved performance of the major

export markets, the United States andEurope, and improved domesticinvestment.

This is likely to increaseemployment and domestic demand,which have been depressed in the faceof fiscal consolidation measures.

Thieves inour midst

STEPHON GREY (GP)

Study links recovery to world economy

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