You are receiving this free quarterly e-newsletter written by Mitchell L. Stump, CPA as his contribution to the ethics education of Club employees, Members, and Consultants to the Private Club Industry.  We trust it is a benefit to you and your Club.
Club Fraud  Issues - February 2016
Club Tax Network  Member CPA's and Attorneys Worry About Financial Fraud
We CPA's and Attorneys are always thinking about and focusing on the potential for financial frauds at your Club. During our annual financial audits and consulting engagements, we are not charged with finding frauds, but if a potential is identified, we will clearly bring it to Club Management's attention. Here are a couple of the latest reports of financial frauds perpetrated against Clubs:
 
"Speak-Up" Culture Learned From Warren Buffett
For more than half a century, billionaire Warren Buffet has proven he knows a thing or two about how to run a company. Buffet released to the public one of his bi-annual memos he sends to his top managers (he calls them his "All Stars").  What he says in the memo, and how he says it, should make Club ethics and compliance professionals take notice.
 
Here are six things Buffett's memo gets right that you can and should replicate as you communicate the importance of a strong culture of ethics and respect with your Club employees and Members.
  1. Written In Plain English: The memo is personal and straightforward. Authenticity and readability are critical in ethics and compliance communications; helping create trust and transparency.
  2. Reflects Deep Commitment To Fostering A "Speak-Up" Culture: The memo underscores Buffett's commitment to a speak-up culture. In fact, he invites his managers to notify him personally at the first suspicion of a potential misdeed. "If you see anything whose propriety or legality causes you to hesitate, be sure to give me a call," he says.
  3. Underscores Strong "Tone From The Top": Buffett challenges his senior staff to embrace the idea that their actions should be born out of not only what's legal and ethical, but also what's right and good - actions that you would "be happy to have written about on the front page of a national newspaper."
  4. Puts Ethical Practices Ahead Of Profit: In saying, "we can afford to lose money-even a lot of money. But we can't afford to lose reputation - even a shred of reputation." Buffett sends a very clear message to his senior and middle managers about where the organization's priorities lie.
  5. Underscores The Business Value Of A Strong Culture: The memo also emphasizes the business value of a strong culture. His own portfolio would underline that fact; supported by his emphasis on corporate culture, it's established to be worth $73.1B. In the note, Buffett says that "culture, more than rule books, determines how an organization behaves."
  6. Short And To The Point: Finally, the note is concise and targeted. It delivers its strong message to a specific audience quickly and in only a couple of pages.  It's immediately clear that Buffett has high expectations of his employees - and specifically places a high level of trust on his senior leaders.
 Adapted from: Navexglogal.com Ethics & Compliance Matters



Is your Club an annual subscriber to  Club Fraud Hotline, a toll free hotline that a llows your employees and Members to anonymously report any of the 24 types of incidents (from theft and fraud to sexual harassment) the hotline covers? This an important tool for your whistleblower policy required of Not-For-Profit Clubs.  
  • NOTE: In 4 years, not one Club has received a single frivolous report made on the hotline.  All reports have been valid - investigated and action taken.
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  • Club "It's All About Golf" Book - Musing of a tax guy with a passion for golf and ideas for growing your Club Membership.
  • Club Litigation Book - Keeping Private Clubs out of court co-authored with attorney Michelle Tanzer.
  • Club Fraud Hotline - Annual subscription based whistleblower hotline; keeping the employee or Member anonymous.
  • Club Capital Planners - Asset replacement reserve studies conducted by our associate Paul Mueller.

www.clubtax.com  or call 561-776-0452 for more information.