Over USD600k Stolen From Revenue Assurance Firm

Is everyone competent to do a reconciliation? Is everyone competent to implement controls that detect internal fraud, accounting mismatches and the like? Lots of people say they can perform tasks like these. But the lack of genuine professional standards for revenue assurance mean lots of people can say whatever they like, whilst they might not be competent to do that kind of work. Sadly, most incompetence is never revealed, and even less is punished. Good professionals know this is true, from first-hand experience. However, it is rare for incompetence to be made public, so we can discuss it openly, like the case of the Bell Canada revenue assurance program that overbilled customers. However, indirect evidence is all around us. We see it in the endless news stories about huge consumer bills that could not possibly be correct and which should have been captured by simple checks for high usage. We also see it in the mismatches between the gross amounts of leakage claimed by some surveys and marketing big-mouths, the degree of variance found in actual practice when settling interconnect bills, and the astonishing levels of precision claimed when complying with retail bill accuracy regulations. I know my views are unpopular in some circles, but I believe it is vital to share stories about situations where things have gone wrong, as well as the times when they have gone well. This brings us to a story about Revenue Assurance Holdings, a small firm in Largo, Florida, USA.

Let me begin by saying I know very little about Revenue Assurance Holdings LLC. I have no personal experience of their business, staff or services. I found out about them through a little story in the Tampa Bay Times:

Largo bookkeeper accused of stealing to pay off previous theft

After Kristina Melvin was fired, the company wanted to figure out how much money she had stolen from them.

They stopped counting at $600,000.

Melvin, an accountant for Largo-based Revenue Assurance Holdings, had altered payroll records and printed up checks bearing the forged signature of owner Nile Nickel.

[Melvin’s] troubles began with 21 suspicious checks.

They were written for thousands of dollars over a period of two months in 2008. All drew from the business account of Revenue Assurance Holdings, which handles financial audits for cellphone companies. All the checks were made out to Melvin.

…the company noticed more suspicious checks, stretching back to 2005, when Melvin was hired.

They pored over their financial records and discovered thousands of transactions she had made through company accounts. None were documented in her personal expense reports, Nickel said.

The company’s final tally was striking. A total of $99,244.13 was charged in undocumented travel expenses. About $50,000 was spent on meals and entertainment. A total of $14,000 went to pay for clothing. All told, Melvin stole $600,000 in three years’ time, Nickel said.

Obviously no business wants to have an employee steal over half a million dollars from them. That immediately raises a simple question: what do companies do, to prevent this kind of behaviour? Put simply, they implement reconciliations and controls which are designed to highlight discrepancies.

What services are provided by Revenue Assurance Holdings LLC? They seem to have no website, which does not help. But these are the words of Revenue Assurance Holding’s Nile Nickel, from a business presentation he gave:

Revenue Assurance Holdings deals in two areas. One is in document management. If you’re dealing with confidential documents that fall under some privacy protection laws, we’re happy to help you with that. The other thing is, if you’re a cellular retailer, and if you have commission statements that need to be reconciled, to see that you’re getting paid what you should be getting paid, we’re happy to help you.

Nile Nickle’s tumblr page and LinkedIn profile contain similar text, both referring to “niche accounting (reconciliation) and revenue recovery services”.

I am not going to jump to a conclusion here. From the story in the Tampa Bay Times, it sounds like Kristina Melvin was an accomplished liar who altered bank statements to hide the evidence of her crime. At the same time, it is easy to see what conclusion others might jump to, when a firm which specializes in accounting reconciliations was unable to spot the significant amount of money stolen by a crooked employee.

Which brings me back to professional standards. I believe it would be to the advantage of Nile Nickle, and his colleagues, if there was a rigorous professional qualification for revenue assurance practitioners. If such a qualification existed, Nile Nickle and his colleagues could show objective evidence of their competence. Of course, such a qualification would only deliver benefits if candidates were thoroughly tested. The qualification would have to be difficult to attain, and some would fail. But the benefit would be measured in more than increased sales and marketing. It would also serve as vital protection for a professional reputation when events like this occur. In short, if the words ‘revenue assurance’ are to be trusted, we need to move towards a genuine, and tough, professional qualification for those who can prove their competence.

Eric Priezkalns
Eric Priezkalns
Eric is the Editor of Commsrisk. Look here for more about the history of Commsrisk and the role played by Eric.

Eric is also the Chief Executive of the Risk & Assurance Group (RAG), a global association of professionals working in risk management and business assurance for communications providers.

Previously Eric was Director of Risk Management for Qatar Telecom and he has worked with Cable & Wireless, T‑Mobile, Sky, Worldcom and other telcos. He was lead author of Revenue Assurance: Expert Opinions for Communications Providers, published by CRC Press. He is a qualified chartered accountant, with degrees in information systems, and in mathematics and philosophy.