Respond in 6 sentences or more.
After watching the video I have identified several internal controls that are effective in mitigating employee theft and or fraud.
1. Establishing policy and procedures to safeguard assets of the company. (Like segregation of duties)
2. Making sure every employee takes their vacation. (This will ensure fraudulent activities are not taking place in their absence.)
3. Business owners need to read and understand their financial statements and do comparisons year to year as well as comparisons with their competitors. (This will allow the owners to see trends)
4. The business should provide a tip line. Employees tend to know more of what is going on in the business than the owner and are sometimes afraid to come forward. Providing an anonymous tip line could help.
Two other examples of internal controls that could be implemented to reduce theft are:
1. Use scheduled and unscheduled audits. This can help catch employee theft as well as prevent it.
2. Perform physical inventory of products at least once a year. (This helps prevent theft as well as catch errors)