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Orchid Top 10 Series – Operationalize Your ATF Compliance

Written by Orchid

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December 05, 2013

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Download or Read Below #1 – Dual Blind Entry Orchid Advisors is transforming the Compliance Ecosystem™ with technical innovation. Each week, we’ll share a few operational best practices to reduce your ATF compliance risk. This week’s focus is on a concept that we call “Dual Blind Entry.” Record-keeping is one of the most important responsibilities of the firearms industry. By maintaining thorough and accurate records of every acquisition and disposition, you aren’t only abiding by Federal law; you are building sustainable and repeatable business operations. Your Book of Acquisition and Disposition (“Bound Book”) is required to be without error.  People make mistakes, we realize that. Accidently recording an incorrect date or serial number into your records is not completely far fetched given transaction volumes and other variables. Unfortunately, that doesn’t make it forgivable. By making a mistake in your Bound Book, you’re not only corrupting records, but also impeding the ability of future tracing efforts. These errors can lead to compliance violations. Therefore, identifying and implementing controlled processes to mitigate the potential for transaction error is an indispensable component of efficient internal governance. “Dual Blind Entry” technology operates upon a simple, ageless idea: it’s unlikely you’ll make the exact same mistake twice. Consider, for a moment, the Internet banking experience. You must type your prospective password twice. Both times, the information is hidden from you (“blind”…the characters appear as dots). By requiring the two passwords to match, the only potential for error is if a mistake is typed the exact same way twice. This same strategy can be repurposed to maintain your Bound Book.  Although the “Book of Acquisition and Disposition” is sometimes referred to as a “Bound Book,” the vast majority of scaled operations utilize software to maintain their records. Typically, information is entered either by hand key, 1D / 2D barcode scans or Optical Character Recognition (OCR). In any form, single instance entry likely increases your risk of error. So, operationalizing Dual Blind Entry technology is simply a matter of duplicating the data entry procedure. In other words, in addition to your conventional means of data keying, you should consider: (a) a second, independent entry by another human; or (b) a second, independent method that includes scanning or OCR. Let’s say, whenever you receive or ship a pallet of goods, the serial information is hand-key recorded by one of your employees. This is a common practice, but all by itself is not a recommended one. After all, a single error made by this lone individual may bring potentially serious consequences. However, add an additional step—say, you have a second employee to hand key the information separately again—and the procedure becomes drastically and statistically more reliable. If the two employees’ hand keyed information does not match, the discrepancy is inspected before the transaction is completed. This is a relatively simple example—most scaled operations would likely implement OCR or bar code scanning technology over hand keying—but it well conveys our point. Doubling the entry points for data entry and making both parties blind and independent will make your recordkeeping process much more than twice as reliable. It would be foolish for us to ignore the concern of adding labor cost and time to the operational process. But searching for serial numbers, correcting wrong-gun in box, reconciling records and responding to regulatory compliance violations comes with a cost too. Evaluate your options and design a well-balanced process that maintains operating margins while significantly decreasing your operating risk.  The ultimate solution will vary by company, business model, technology capability and other factors, but it all starts with solid data integrity controls like Dual Blind Entry. Orchid Advisors provides electronic newsletter (“Advisory and Alert”) and blogs for general informational purposes only. It should not be considered a formal or informal interpretation of law. It is not intended as professional counsel, should not be considered legal advice and should not be used as such.

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