The Human Aspectplease Respond To The Followinginyourownwordsassume
Assume that you have to hire someone who will have a high level of access in your company. What kinds of considerations should an HR person have when hiring someone like this? Some organizations check your credit score. Is that fair? What kinds of controls would you have in an accounting environment to avoid potential embezzlement? Name at least 5 controls and discuss how they would prevent someone from being able to embezzle money.
Paper For Above instruction
Hiring individuals with high-level access in a company requires careful consideration to ensure trustworthiness, competence, and integrity. Human Resources (HR) must evaluate a candidate’s background, including criminal history, employment history, references, and possibly their financial standing. When assessing financial background, some organizations check credit scores. While this can indicate financial responsibility, it raises ethical questions about fairness and relevance, especially considering individuals who may have faced financial hardship due to unforeseen circumstances. Therefore, HR should weigh the relevance of credit information within the context of the role and in accordance with legal guidelines to avoid potential discrimination.
In addition to scrutinizing candidate backgrounds, establishing robust internal controls is essential to prevent embezzlement and financial misconduct within the organization. Effective controls serve as safeguards that reduce the opportunity for unethical behavior and detect anomalies early. Here are five essential controls in an accounting environment:
1. Segregation of Duties
This control involves dividing responsibilities among multiple employees so that no single individual has control over all aspects of a financial transaction. For example, the person authorizing payments should not be the same person record-keeping or reconciling accounts. Segregation minimizes the risk of intentional misappropriation, as collusion becomes more difficult and errors are more likely to be caught.
2. Regular Reconciliation
Reconciliation processes involve periodically comparing accounts payable, receivable, and bank statements to internal records. Regularly scheduled reconciliations help identify discrepancies or unauthorized transactions early, serving as a deterrent to potential embezzlers who know their actions
3. Authorization of Transactions
Implementing a requirement that certain transactions, especially large disbursements, receive managerial or higher-level approval ensures oversight. This control prevents unauthorized or fraudulent transactions from occurring without supervisory scrutiny. It creates an additional barrier for potential embezzlers attempting to conceal illicit activities.
4. Access Controls and Password Protections
Limiting access to financial systems to authorized personnel through role-based permissions and strong password policies reduces the risk of unauthorized access. Monitoring system logs for unusual activity further enhances security. When only trusted employees have access, the potential for internal fraud diminishes significantly.
5. Surprise Audits and Internal Reviews
Conducting unannounced audits and internal reviews acts as a deterrent to employees contemplating embezzlement. Knowing that their actions could be scrutinized unexpectedly discourages dishonest behaviors and encourages integrity among staff. Additionally, these audits can uncover irregularities that may have gone unnoticed.
Implementing a combination of these controls creates an environment of accountability and transparency, control measures that significantly decrease the likelihood of embezzlement. They foster a culture of honesty, provide multiple checkpoints for financial transactions, and enable early detection of misconduct, ultimately safeguarding the organization's assets and reputation.
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