Transportation & Logistics issues: Risk & compliance

A functioning risk management is critical for a company. Transportation and logistics companies do not only secure themselves against operational risks as damage, delay and piracy.

It already starts with the challenge to design contracts with partners and clients in a legally and fiscally correct way to avoid contract penalty or administrative fines. Further risks are country specific ones, as the announcement of sea freight to the US, complex and connected IT systems and integrated Enterprise Resource Planning systems.

Risk management means to analyse and react to all potentially occurring risks. Control systems are as important as training of employees and a clearly defined crisis management. Thus, apart from financial damage, the client might change quickly to competitors.

Compliance - as well as risk management are imperative parts of a good corporate governance.
The requirements of corporate governance are increasing. Companies, which pro-actively decide to implement a compliance management system, are eager to detect and eliminate weaknesses and gaps. Compliance regulations are the link between governmental regulation on the one hand and employees on the other hand. Our experts explain risks and potential applications for e.g. fraud or corruption and define correct behaviours.

Pre-defined responsibilities, control systems, standards and code of conducts enable employees to make informed business decisions quickly and with confidence.

The damage and the consequences of fraud are too high to be ignored: According to the average loss incurred by one incidence is approx. 1.1 million Euro.

We know that the protection against fraud and data abuse is not easy for transportation & logistics companies. They are confronted with enormous competition and the international freight transport signifies the collaboration with different nations and cultures. In some countries, there exists only a narrow path between local business practices and fraudulent delict.

Companies that openly and systematically address these issues, diminish the risk of becoming a victim of fraud. We can check the steps you have already taken against fraud and what have been done in the past with incidents of fraud, should they have occurred. Let’s examine together the surrounding of your company, and if your finance and control systems are up-to-date. We can also offer:

  • Enterprise-wide risk management
  • Management of financial and commodity risks
  • Risk management for financial service companies
  • Support in meeting legal and regulatory requirements
  • Analysis and optimisation of corporate management/internal control systems
  • Disclosure and prevention of corporate crime
  • Advice and expert evidence in disputes

CASE STUDY

Safeguarding against fraud in the payroll process

The issue:
A very visible public company operating in a highly unionised environment began having trouble calculating its pension plan retirement payouts. Then, in connection with a payroll system change, payroll and expense checks of company senior executives were miscalculated. With the spotlight turned on them, the company’s payroll managers went on the defensive. In response, senior management decided to review the payroll system’s implementation and document all internal controls in the human resources and payroll functions.

Our solution:
We checked the internal control documentation and to made recommendations about improving the documentation process. We were also asked to investigate the errors that had occurred in calculating retirement payouts and payroll. In response, a member of PwC’s fraud risk and prevention group joined our audit team for purposes of fashioning control recommendations and data analysis tests for use in identifying evidence of fraud. Subsequently, our team provided the company with numerous avenues to pursue in terms of investigating suspicious activity. PwC also recommended several new fraud-related controls be built into the company’s business processes. Management now has a well controlled and effective payroll process — and one which is better protected from occurrences of fraud.