Question

Effective segregation of duties is sometimes not economically feasible in a small business. What internal control elements do you think can help compensate for this threat?

Answer 1

Following are the ways to compensate this threat:-

1. Mandatory vacation:-

Staff should be encouraged to take at least more than one two week holiday. During this period, when someone performs his work, then there are chances that it might unravel frauds.

2. Pre-employment screening:-

All the new employees should be screened for validating their credentials because correct information is the foundation stone of trust.

3. Creating and analyzing the reports to evaluate the performance of the organization. For example, budget vs actual results, new customer details, etc

4. Scrutinizing the financials regularly to uncover any unusual activity.

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