Question

Agree or Disagree to the Post, then explain your thoughts.

Separation of duties is when you have more than one person doing or completing a task or a job. Separation of duties is an internal act used to control and prevent fraud. This will reduce fraud because each employee has a separate task to focus all of there attention on. Redundancy is a good control because it allows employees to look at the same transactions. This will help elevate fraud because you will have more than one eyes looking at the same transaction. Centralized process allows for a tighter control over the inventory. During a centralized process, you will be able to track and and monitor your inventory more closely. "Internal controls should also be used to detect fictitious vendors."

Small businesses are more susceptible to employee fraud and theft because they do not have the internal controls in order to detect fraud and theft. Small businesses has it rough because they do not have the resources to implement internal controls.

Organizations can encourage employees by giving them different ways to report fraudulent behavior, such as through email, telephone hotlines and through the organization's web portal.

It's very important for a organization to have a code of conduct that describes fraudulent behavior and the consequences for their actions and behavior. This should also include that there would be no negative consequences for reporting fraudulent behavior as well.

Answer 1

Separation of duties is important and that means that tasks are assigned and seperates based on hierarchy. But this doesn't prevents fraud.

Redundancy is not good, because it's wastage if manpower. Rather supervisor should review the tasks assigned.

Centralised process do allow tighter control for the inventory, but it also forms rigidity. So the management should have adequate controls and decentralisation wherever circumstances permit.

Yes, internal controls should be appropriate at each level of organization and they should be reviewed and updated regularly.

Frauds do happen at corporates like Enron, its not about the size of organization, rather its about how ethical company's officers are in their activities and what steps are taken by the management to guide them in order to fulfill their duties, and keep investor's interest above all.

Definetly, Organizations should have proper mannuals for code and ethics, they should educate employees to follow SOP, violation list should be maintained and employees should be encouraged to report violation.

The organization should take action against those who are unethical and promote the code of ethics in the company.