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Module 6 response

Module6 response

Module6 response

Organizationalinternal controls such as redundancy, separation of duties andcentralized processes discourages staff from enhancing fraud. It isalways easy for fraud to be committed in an organization irrespectiveof the size3 of the organization where internal controls are notstrong. With separation of duties means that only one job for anindividual and having separate individual conduct checks limitschances of employee fraud. Centralized processes means only what isnecessary for the job is acquired hence reduce overspending. Once theemployees are aware that the organizational processes are centralizedand resources tracked, they observe integrity. Small enterprises aremore susceptible to employee fraud since there is no ability toenforce internal controls. There is only one staff for every job ordepartment hence increasing the chances of errors and fraud. Largebusiness has several individuals per department ensuring there isseparation of duties minimizing fraud. Once such losses occur forsmall companies, they are unable to recover from such a loss hencesuccumb to bankruptcy. This is because they are limited in theresource base unlike large businesses, which can accommodate largerlosses without shrinking.

TheACFE established that about 40% of fraud cases become known majorlythrough employee tips. With the help of honest employees, fraudulentactivities are easily reported. The HR department should then providean anonymous reporting channel without victimizing whistle blowers.Once such tips are provides then the HR department should escalate tothe top management to address the possible roots of fraud. It is veryimportant for an organization to stipulate a code of conduct todefine fraud and consequences of such fraudulent activities. Oncesuch information is available in the organizational public domainthen all members of staff would adhere to such codes to protect theirreputation as well as retain their jobs. The organizational code ofconduct should be introduced as early as signing the job contract soas conduct themselves within acceptable ethics.