An American private fleet that has been known to spend up to US$3.1 million every month on fuel saw its diesel and gasoline charges drop by almost $1.4 million over a two-month period in the summer of 2008.

And while a small part of that amazing saving came from delivering less product, the people in charge of corporate security at the company know that it's also a result of a new internal auditing procedure, used to track the 3,000 or so fuel cards used by the fleet's drivers around the continent.

"In some areas of the United States and Canada, company delivery vehicles are fueled before they hit the road, but in many places, the drivers receive purchase cards to buy fuel," the auditor who checks the company's expenditures, Penny Borjas, says.

"We have standard operating procedures for card usage, but in reality, each driver carries the fuel card around the clock and knows the authorization codes for use at the pump.

Unfortunately, it's not difficult for a driver to get a personal transaction past an overworked manager assigned to review the purchases."

Borjas and her team felt this posed a significant risk, particularly given the high cost of fuel last summer, so they conducted a few simple tests. They checked to see if drivers were fueling on their days off or outside regular work hours.

Well now.

"The project immediately found employees using the fuel cards for personal purchases and sent a clear message that employee transactions were being closely monitored. Between June and July 2008, our company saw a $1.4 million drop in fuel costs, despite record prices at the pumps during those two months. 

Sometimes transport security and
defending against fraudulent claims
boils down to good old-fashioned instincts.

"It was a huge success, and these tests are now performed monthly. An unanticipated success [of the investigation] was the breaking down of silos within our company. Though initiated by the search for fraud, the fuel card project became a collective, multi-department effort that got various departments working together towards the same goal."

Internal audits can reveal a lot more than employee fraud.

At the Atlantic Provinces Trucking Association (APTA) conference in October, two representatives from J.D. Irving Ltd., told delegates that internal auditing has saved the company millions because it stemmed theft, double billing, invoicing errors and inappropriate use of company resources.

With a company the size and scope of Irving, the potential for skullduggery and mistakes is enormous. In addition to its petroleum, retail, forestry, shipping, printing and assorted other industries, the 15,000-employee giant also owns Sunbury Transport, the Midland Group, and the bulk hauler RST Industries.

Rod Belyea is the manager of internal audit. He says that one particular project almost a decade ago underscored the importance of scrutinizing the comings and goings of money in your fleet. About eight years ago, Irving invested in software devised by Vancouver's ACL.

The cost of the software package -- $3,000 per licence. Inexpensive by any standard. And only a few hundred bucks per year for ongoing tech help.

Quickly, the software earned its keep.

"When we first brought in the software… we had a co-op student in and he did a check and found that the company had made duplicate invoice payments -- not for $50,000; not $100,000, but for $500,000."

"And remember," Belyea told the audience, "If you overpay a supplier, they don't come back and tell you."

From there, the internal audit procedures permeated the Irving empire.

"If a truck should go through 5,000 liters of fuel a week and it's going through 10,000, you have to know about that."

That's precisely the kind of information ACL's audit software is designed to flag. Anomalies.

ACL was founded 22 years ago in Vancouver and has grown to be the internal audit program of choice for, according to the company, 95 of the largest 100 corporations in the U.S.

Don't feel bad if you haven't heard about ACL. David Chiang, the director of professional services at ACL, tells Today's Trucking that ACL is "a quiet success story."

Basically, the firm specializes in conducting investigations into fraud, inefficiency, billing errors, or, as one financial writer put it, "anything else that costs money that organizations don't want to spend."

One of their recent client coups has been the $72.4-billion German firm Siemens, which installed ACL software to monitor the purchasing behaviors of its 1,300 divisions.

Given the high-cost of diesel, do you have checks and balances to
ensure your not being charged for non-work-related fuel pumping?

In his presentation at the APTA conference, Irving's Belyea, who describes himself as "definitely not an IT guy," said the auditing package was not only inexpensive it was extremely user friendly and simple to understand.

Later, Belyea said "I guess I sounded like an advertisement to them, but it has saved us a lot of money. That software paid for itself 10 or 20 times over."

And the really good news is, according to ACL's Chiang, the software is applicable to small companies as well as the behemoths. You can use the internal auditing to your drivers' fuel purchases, their fuel-purchasing patterns and billing practices. Chiang says an ACL representative will discuss your particular concerns and prescribe what sort of internal auditing system would suit your operation best.

Regular internal audits, with or without software, can mean the difference between bankruptcy and prosperity.

Belyea's co-presenter at the APTA conference was Jerry Pretty, from JD Irving's corporate security department. A former Mountie, Pretty outlined a grim picture of how frequently and creatively a company like Irving gets targeted. Ongoing vigilance is key.

In another battlefront on its war against lost income, Irving has implemented Electronic Fund Transfer (EFT) for about "97 percent of the dollars and 91 percent of the number of all payments" to suppliers. EFT, which is available through most major banks, eliminates almost all your check writing.

"Checks," Pretty says, "get stolen, scann­ed, and copied. So we pay all our suppliers electronically."

J.D. Irving has developed an elaborate cross-company system that identifies and address possible security risks in seven areas: Procedural security, physical security, personnel security, access controls, educational and training (awareness); manifest procedures; and conveyance security.

Still, even with all those systems in place and the finest software money can buy, transport security sometimes boils down to good old-fashioned instincts.

Take the case of one fraudulent claim that arrived on Pretty' desk a few years ago.

A man in Pennsylvania submitted a claim to Irving, saying his SUV had been sideswiped by an Irving truck but the truck driver hadn't noticed and drove away. So far, so possible, right?

The guy submitted photos of the damage and an estimate from a body shop. There was $1,500 in damages. He said he could provide witnesses but he was also suggesting getting the matter over with handily.

So Irving could simply send him along a check and everything would be fine.

"The claim came so long after the fact it was hard to check for damages to the truck," Purdy says. Fortunately, before sending the man money in response to his claim, Purdy wrote back and asked for some insurance information.

The claimant phoned back a few weeks later; and when Irving's people asked for some specifics, he said he didn't have the insurance papers handy; they were in his wife's car, and on and on.

The guy suggested a compromise. He said he'd accept a check for $1,000 and that would be end it.

"Who," Pretty says, "would be prepared to write off a third of a claim just like that?"

Suspicious, Pretty contacted the police in the man's area, they poked around, found out he did in fact run a body shop in Pennsylvania but he has also contacted another trucking company in Ontario, with the exact same fake claim.

Same photos, same estimate.

It would be hard to find a software program that can think like an old cop.