Tree Farmer - September/October 2007 - (Page 30)

Motives And Other Myths Regarding Financial Crimes I am not an expert at human behavior or criminal activities. I’m a forester who audits woodland operations; my goal is to help landowners, forest managers and others avoid the hardships associated with financial crimes and negligence. In order to protect your woodland operations against financial crimes, there is a sad fact that we all have to confront: You will, eventually, encounter people who will cheat you if given the chance. And here is the sad fact that auditors, the police and investigators know too well: Until we have established the evidence, we can’t tell who is honest and who is not. The myth that laymen (not police, not auditors) have to overcome has to do with motives. You might hesitate to turn your business over to a person recently bankrupted. A prosperous, cheerful fishing buddy, on the other hand, would clearly have no motive for cheating you. Sorry. Your conclusion could be wrong. Neither you nor I nor the FBI has the ability to anticipate the motives that prompt criminal behavior. We might have no inkling what crisis another person is going through, or how they perceive the world. Persons with an excellent education, great financial success, strong religious affiliations, deep family and community foundations, and much talent in their fields have become entangled in financial crimes. These things occur for motives that are never visible and might never be understood. Now I do not recommend turning your assets over to a person who doesn’t like you and has demonstrated poor management skills. It does make perfect sense to work with reputable, successful people. However, your perceptions of trust, the absence of motive, and good will are not enough. You have to maintain high-quality internal controls in all transactions, irrespective of your own perceptions of the people involved. So, your ability to anticipate motives would be Myth #1. You can’t do it. woodland security By Kazee TOM can easily have legitimate authorization numbers and illegitimate authorization numbers. He or she can intentionally or accidentally use the wrong number and the wrong people get paid. In the absence of other internal controls, this error can go unnoticed. A crooked driver might be stealing from the landowner and the logger. The driver, with nothing invested in the wood, truck, or diesel fuel, can drive a load a very long way to deliver a stolen load. All locations will have small converting facilities, like woodyards or small sawmills. These are often “below the radar” and neglected by industrial foresters. Although they may only purchase five or ten loads a day (or less), your timber can disappear into these just as easily as a large mill. Drivers, loggers, foresters, timber buyers, and others in our industry are absolutely as honest as any other group of people. You — the owner — are the essential, fundamental, and indispensable key to high-quality internal controls. If you are sloppy with your assets and transactions, others may also be sloppy. Negligence is not criminal, but negligence will facilitate financial crimes. It is prudent then for you to take extra care in managing your woodland operations. With high-quality internal controls consistently applied, you can enjoy your forest with greater confidence. Registered forester Thomas Kazee helps clients across the Southeast reduce the potential for financial crimes through his firm,Woodland Security Inc.in Orange Park,Florida. Reach him at (904) 504-9489 or . Myth #2: They won’t steal pulpwood. Wrong again. “They” will steal anything. A thief might have an outlet for pulpwood but not sawtimber. This would be a small woodyard that pays off in cash and asks no questions, for example. Pulpwood will have a lot less value than sawtimber; it is also more likely to disappear unnoticed. I inspect many timber sales where the poles, plylogs, and sawtimber are carefully cruised; 90 percent of the value in a sale can be in premium products. If half the pulpwood is stolen or lost, a lot of money could be involved. Losing $300 on a load of pulpwood might not be catastrophic. But if it happens three times a week for 50 weeks, a lot of money is lost. My recommendation: All assets must be recognized, appraised, and accounted for. Myth #3: “They” can’t steal my plylogs; there is only one mill that takes plylogs. We can watch your wood go across the scales and it can be stolen right in front of us. All your wood can go to the same facility and loads can be lost. Usually, when a driver stops on the inbound scales, he presents an authorization card or number to the scaler. This indicates what supplier/landowner/logger is to be paid for the load. A driver 30 Tree Farmer SEPTEMBER/OCTOBER 2007

Table of Contents for the Digital Edition of Tree Farmer - September/October 2007

Cover1
Contents
Cover Story
Conserving a Sense of Place
Northeast Tree Farmers of the Year
Wildlife Matters
Tools & Techniques
Taxing Issues
Woodland Security

Tree Farmer - September/October 2007