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Control Measures

1.We have identified many different control measures the company could have put in place to prevent fraud, but what about changing the culture of the work environment as a possible deterrent? If an employer can establish a people-first attitude, one in which its employees feel as if they are part of the family, it is less likely that anyone would consider committing fraud.

How can auditors help establish such a culture to guide the thoughts and actions of employees?

2.Involving employees in the identification and solution of problems often yields the best results. What types of incentives programs could companies put into place to encourage employees to contribute their ideas?

3.To discourage employees from going down the same road as those who have been caught red handed, whenever we terminate a manager for theft, or other wrongdoing, we publicize the impropriety to let everyone know that we will not tolerate it.

Recently, a rookie Manager was caught stealing. Not only did we turn the evidence over to the local authorities to have him thrown into jail, but we sought and were granted restitution. All that was left was for us to make it public and let others know that we would not hesitate to do the same to anyone else who chose to steal.

Could there be disadvantages to making Loss Prevention cases public?

4.How do you reconcile the need for a quality audit with the need to stay within budget?

5.If a Payroll Manager for a small company makes $30 per hour, and it takes her 15 minutes to reconcile vacation hours, automating the process would save the company $7.50 per pay period, or $195 annually. Now, you may not think of this as a huge savings, but if you find many opportunities like this to save the company money, it will be worth their while.

In our company, we have worked hard to change the paradigm from spending lavishly to saving pennies. For every dollar we save the company, the greater the likelihood they will keep us on the team.

What strategies can auditors use to identify where their clients should cut costs?

6.How can we detect if our own peers are conducting themselves unethically? Also, what action would you take if you found someone on your audit team being an accomplice to fraud?

Solution Preview

1. This is a tough area because while creating this kind of culture can bring people together, it can also cause management to put false blinders on as well, and to not notice when fraud is taking place because the employees become so trusted in a close-knit circle, which is created by the culture. Management really needs to create a culture where the employees and management can be close, which prevents fraud for the most part, but the employees need to know that there are consequences for any type of illegal and unethical acts. Auditors can establish this type of environment by acting openly with employees, and by letting employees know that as a workplace family, there is trust but there are also healthy boundaries that need to be maintained.

2. Many companies have benefited from rewarding employees for innovation. Any employee who submits an innovative idea that the company decides to implement is given a small bonus ($100), or is given a day off with pay. Material rewards such as these are really a good motivator because it is something that ...

Solution Summary

This solution thoroughly explains each of the auditing and control measures questions listed.