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Avoiding the Iceman An excerpt from the Audit Awareness & Appeal Guide As we’ve addressed, out-of-line CPVS scores are the precursors to either having a dealership placed on some sort of self-review, control process or audit watch. In a nutshell, what we do to one vehicle over a period of time affects your ratings and Big Brother is always watching. If you happen to work with a franchise where the manufacturer provides an opportunity for you to be forewarned of out-of-line conditions before a full-blown audit, you will most likely have restrictions or limits placed on your ability to self-authorize claim payment. This type of control is pretty flexible and allows the manufacturer to isolate only conditions that appear to be out-of-line. Both Domestic and Import manufacturers use this system frequently. Another option for the manufacturer is to place a dealership on probation until numbers are back in-line for a reasonable amount of time. These type programs are called probation periods, counseling process, self-reviews, etc. Often the manufacturer’s rep will want to be involved to some extent in the process. Unfortunately, many are ill-prepared to offer sound advice or guidance. In some situations, the manufacturer (common with GM, Ford and DaimlerChrysler) will provide a list of claims that have been “identified as potential warranty concerns.” When viewed objectively, these will almost always paint a picture of what’s driving out-of-line conditions on a warranty expense report. Management should conduct a hands-on review of the entire history folder (never just a computer review). After all, the manufacturer is providing you with a list of claims they would be looking at if this had been a full-blown audit. I stress “viewed objectively” for good reason. This is perhaps the hardest thing to do when involved in a self-review process. No one appreciates having their paperwork brought to question. In fact, when going through this process you may be shocked to see how may “problem” vehicles and/or customers are listed. It’s easy to become defensive when you’ve been doing your best to repair a condition, only to find that a computer has isolated it as a problem. Remain calm. Remain objective. Take it as it is—an opportunity to segregate problems in-house, without a visit from the Iceman. Just because a claim is listed doesn’t mean the manufacturer expects you to debit all or a portion of it. Look for areas that may reflect charges that are not the responsibility of the manufacturer. Prime examples are: shop comebacks, misdiagnosis, over repairs, excessive parts, labor or sublet, shop supplies, etc. Where prudent, debits should be accepted and controls implemented to reduce the likelihood of recurrence. Although it may not be noted in a self-review or counseling process, any suggestion of fraud should immediately be debited. (More on fraud later in this guide.) As I said earlier, often it’s the $10.00 or $15.00 mystery part that may be creating havoc on warranty expense reports. “Excessive parts” is a common driver of out-of-line conditions. Ask yourself if they were really needed and documented. A dealership where I was conducting a review had replaced a diesel engine assembly—in itself a sizeable repair. Reviewing the parts used, I found a complete set of glow plugs and exhaust manifold billed. Since there were no comments to support these parts, I asked the technician what caused him to replace them. His response: “You don’t think I’d put in a new engine and use the old glow plugs, do you? What do you think I am, stupid?” Another technician standing nearby chimed in, “You probably should've replaced the controller too.” (We all had a good laugh.) As for the exhaust manifold—it was damaged when it fell off his bench. From a compliance standpoint, other items need to be examined too—always objectively. Incomplete or inadequate documentation such as management approval, missing hard copies, signatures, comments, etc. should be corrected, but not necessarily debited. The main thing here is to figure out how to break the cycle. Again, compliance issues, in themselves, may not be the driving factor behind out-of-line conditions but, they will always be easy audit targets. A simple, but effective, means of help in this area is to keep the hard copy together with the warranty copy until the claim is paid. This can drastically reduce documentation shortfalls before a shop copy hits the history folder. As you are reviewing claims during this process, you should be making notes
to outline an action plan and determine how any excessive charges and/or
non-compliance slipped through cracks in the first place. Order the Audit Awareness & Appeal Guide Contact Warranty Matters
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