Four Approval Signatures

An outside consultant was asked to find out why there were so many errors in a process that required four individuals to review and sign off on the work that was done. What she found was very disturbing. It turns out that while all four approvers knew they were supposed to review the document carefully before signing off, none of them reviewed it all all.

The first reviewer was the most junior level manager. He decided the other three knew much more that he did and would catch any errors. The second reviewer was more senior than the first and she decided that the first reviewer would catch anything obvious and the third and fourth reviewers would catch all of the more difficult problems. The third reviewer was sure that the first two would catch any errors and the fourth reviewer would make any important decisions. The fourth reviewer decided that if there were any problems, one of the other three reviewers would have found and corrected them before the document came to her for review.

Thus, each of the four reviewers signed the document and none of them reviewed it at all. So, what is the answer to this apparent puzzle. There are two answers that should be applied in all cases of multiple document review:

• When developing a process procedure there should always be a specific expectation as to what each reviewer is to be responsible for checking and correcting.

• Regardless of what the procedures say, each person assigned to review a document is to consider that she or he is the only one who is checking the document. Therefore, if there is an error to be corrected or a decision that needs to be made, there is no expectation that anyone else will do it. This attitude ensures that a document receiving multiple reviews get more attentions, not less, than one receiving a single reivew.

If you come across some internal control puzzle, such as four signers none of whom actually review anything, or you have more ideas on when to specify multiple reviews or how to make sure all reviewers do what is expected of them, send a message to Stu on Patrol or use the comment feature of this blog to get back to me.

Control Through Automation

One of the best ways to strengthen internal controls is to automate a process. For example, for many years travel orders were prepared as paper documents and later data-entered into the financial system. However, the paper document does not know for sure if there is money available to pay for the trip, or if the travel has started before all needed approvals are received, or even if all required approvals were ever received.

Now we have E2 Travel, which has increased our level of control over travel a great deal. Under this system all employee travel must be approved and booked through the E2 Travel system. Therefore, our Travel Management Center will not book transportation unless they receive the approval from the E2 Travel system. Also, the obligating travel order is entered into the Momentum financial system on the basis of the aproved amount and accounting codes recorded in the E2 Travel system. This means in most cases that it is virtually impossible for an E2 Travel trip to begin before it has been fully approved. Future integration of E2 Travel with the Momentum financial system will eliminate some of the current data entry and processing steps for travel orders and travel vouchers.

If you have other ideas about how to improve internal control over travel, or if you have noticed a weakness in how it is currently being controled here at the Corporation, please comment back to Stu on Patrol.