A parallel business is also known as a side business.
If you are in a catering company, it would be like your colleague ordering 10 cases too many of champagne, and then getting those additional cases delivered to their wife’s restaurant directly.
But it can be bigger than that. While I was working in China, a customer of ours discovered that the CEO of one of their entities had an entire floor dedicated to his parallel business within the same building.
So how can you prove that you have a parallel business going on?
1/ Benchmarking the margin per product between entities
2/ Identifying stock that is purchased but that never arrives in your entity
3/ Benchmarking head-count per revenue between your entities
4/ Benchmarking prices on stock purchased between entities or compared to market price
5/ Comparing purchasing volumes to sales volumes
6/ Benchmarking inventory storage costs per revenue between entities
7/ Benchmarking fixed assets inventory per revenue between entities
8/ Monitoring stock adjustments and write-offs
9/ Monitoring fixed asset adjustments and write-offs
10/ Monitoring payments or invoices without purchase orders.
As you can imagine, it’s not only one of the above that might get the alarm bells ringing for a parallel company in your far away entity but the combination.
That’s why we created AUditZOOM. In AUditZOOM you have over 300 tests, each with KPIs, for SAP data and covering all business areas. You can therefore quickly look through all these aspects for each of your entities and compare numbers, in order to then drill down to transactions that could point to parallel business activity.
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