At the supermarket company where I worked, they had a wholly owned subsidiary trucking company. They kept a core cadre of drivers and trucks for the basic deliveries and used a local contract firm for overflow. The company company was unionized as a stand-alone union. The drivers were pretty high-caliber professionals and one year, a Hannaford driver won a national truck driving competition. But I think they were an irascible group, and internal audit was kept away from the operation, for the most part, on purpose. Nobody wanted to kick the wasp nest.
Then, there were a series of very tragic truck and car accidents in Maine and surrounding states, caused by tired drivers, tired truckers. Several drivers were found to have falsified their logs and had driven beyond the permissible limits. As Manager of Internal Audit, it occurred to me that the company should address the risk of one of its drivers being involved in a similar incident. The result would be tragic and possibly have a significant negative financial impact, both directly from legal and settlement fees, and indirectly from negative publicity. So I proposed to the VP if Internal Audit that we examine the trucking company’s records to ensure we were not at risk.
I was told firmly that there would be no interference with the trucking company and that as far as everyone knew, things were well under control and there were no problems. When I asked, “How do we KNOW that’s the case?” I got the answer that, “We just know.”
Fine, I wasn’t quite ready to play “You Bet Your Job” for the issue, but I kept up my nagging. I may not always be right, but in my opinion, I’m never wrong. I finally convinced the VP to at least ASK the trucking company management how they exercised control over the aspect of truckers working longer than they should. He came back to me and reported that they were ALL SET. They contracted with a retired federal DOT inspector to come in every month and perform a 100% census of the driver log books and records.
OK, that sounds very good. My next question to him was, “What does the retired inspector FIND during his monthly review?”
The answer was, “Um….I don’t know.”
“Don’t you think we should at least look at what the findings are, just to demonstrate some due professional care?”
He didn’t like that. That meant he had to go back to the trucking company management and ask again. But at least he did it and got permission for one of my auditors to look at the process. And our findings?
The independent inspector discovered, documented and reported to management similar findings for some drivers again and again, some times on a regular monthly basis. These findings were log violations, including working past the allowable hours. The trucking company was taking no effective corrective action. Same drivers, same finding, see you next month! This seemed to me to be almost worse than not doing the monthly review in the first place. To the company’s credit, they did implement a process of more effective follow up with the deficient drivers, and the internal audit department was able to demonstratively reduce the general risk to the company in this area.
But how many times does internal audit propose a perfectly logical and valuable recommendation to management, only to have some zipper headed moron decide they know better? It happens all the time. Sad but true.
Perhaps the term “zipper headed moron” is slightly inappropriate. Sorry. I’m passionate about my work.
CIA, CISA, CPA, Internal Audit, internal controls