One preventative step to avert any type of potential employee fraud is to perform
an at-risk assessment of the company’s assets that may be at risk from employee
dishonesty – everything from equipment, to inventory, to credit cards and cash on
hand. An at-risk assessment starts with the identification of the assets that could
be stolen or misused and continues with a review of controls to determine whether
adequate protections are in place.
The at-risk assessment can be performed by an experienced CPA, who may
or may not be a forensic accountant. An internal audit department may also
be tasked with performing these types of assessments. Whoever performs the
assessment should seek out company representatives who understand the stated
company controls, and who can navigate the cultural nuances within the company
to determine what is actually being done. It is not unusual to find that the stated
policies and procedures have morphed over time so that what is actually being
done is nothing like what was originally intended.
Companies should also let their employees know that they will prosecute employee
fraud. One of the most significant deterrents of employee fraud is the certainty that
employees will be prosecuted if they commit fraud against the company.
The company must have internal control systems and monitor them to make
sure they are effective. This means considering both aptitude and attitude. For
internal controls to be effective, the people responsible for overseeing internal
controls must know what the proper procedures are, have the aptitude to follow
up on details, and the attitude that internal controls are important and must be
followed. Without these factors, the best internal controls can be totally ineffective.
Taking steps to protect the assets of the company during this unusually stressful
period also protects the people in the organization. Since people are the most
important asset of a company, it is very sad to find that a trusted employee has given
into temptation under stress. If the temptation is removed by confirming internal
controls are effective, an otherwise honest and productive employee may be protected.
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Vol. 5 No. 10 Attorney at Law Magazine® Greater Phoenix | 27