Managers have also been known to inflate income and assets to increase a firm sale price or gain higher compensation. That Protect When it comes to communicating, companies need to tear down walls. But when guarding against fraud, building walls is better. An adequate control system segregates your company's authorization, custody, operation and record-keeping functions. Such segregation is one of the best ways to control employee access to your business's assets.
Effective controls mean separating and documenting every important financial activity.
For example, insist on proper authorization and documentation for every financial transaction. Rotate custodial responsibilities among several employees and independently check on their performances. A small firm's very nature can leave it vulnerable to fraud. Insufficient staffing can lead to inadequate duty segregation. A small company lacking enough employees to properly separate responsibilities too often concentrates access to cash, inventory and fixed assets in the hands of one or two 4torkers.