Elements Of Fraud Prevention, Authority Limits, And Transaction Level Procedures

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Key Elements Among the many elements in fraud prevention are HR procedures, authority limits, and transaction level procedures. An organization’s HR function can play an important role in fraud prevention by implementing the following procedures: 1. Performing Background Investigations A key business and fraud risk in any company lies within the people that are hired to run the business and being promoted into positions of trust and authority. Because of that, it’s very important to identify employees who match the job skills by evaluating their competence and background, and also be aware of any personal issues that could impact their suitability for the position. You can learn a lot about an individual by confirming their work history…show more content…
How effective the training is will be based on attendances and also having periodic updates and refresher sessions. 3. Evaluating Performance and Compensation Programs HR managers should be involved in both the performance management and compensation programs. Performance management involves the evaluation of employee behavior and performance as well as work-related competence. It is a human trait to want recognition of competence and reward for positive performance and success. Regular and robust assessment of employee performance with timely and constructive feedback goes a long way to preventing potential problems. Employees who are not recognized for what they do and what they have accomplished, especially those who may have been bypassed for promotion, may feel their inappropriate and fraudulent conduct is justified. Fraud is likely not to occur when a person’s authority level is equal to their level of responsibility. A mismanagement between responsibility and authority can lead to fraud. An organization could establish authoritative approval levels throughout the company to serve as an entity-level control. However, personnel working within a specific job could be assigned limited IT access as a process-level control. These types of controls which are supported by appropriate
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