What controls should be put in place to protect the company’s assets from fraud?
Company assets such as inventory, equipment and vehicles are highly susceptible to fraud and need to be protected. Internal controls should be put in place to protect these assets.
Below is a discussion of the controls to be put in place to protect these assets:
- Inventory:Inventory should be kept in a secure area and access should be limited. An inventory management system should be used to track inventory movement. Inventory should also be counted regularly (annually at minimum) and physical counts compared to internal records. Differences should be investigated.
- Equipment:Equipment records should be kept detailing purchase dates, cost and serial numbers. Policies should be implemented and followed requiring authorization for offsite use of equipment. Insurance coverage of equipment should be reviewed annually. High value equipment should be kept in secured areas with access limited to authorized individuals. Owner/manager approval should be required for purchase, disposal or sale of all equipment.
- Company Vehicles:Records should be kept detailing purchase dates, cost and serial numbers. Usage should be restricted to approved employees with clean driver’s abstracts. Mileage logs should be kept. Policies should be put in place to require approval for personal use of company vehicles and pass liability to the individual.
Reviewing the above reports each period will help you identify irregularities and detect fraud.
If you would like to discuss control of your assets and how to protect your company from fraud, get in touch.
Author: Grant Gilmour has been in the CA business since 1988, starting his own practice in 1994. His tax expertise encompasses tax planning, international tax issues, and Scientific Research and Development tax credits. He is a graduate of the CICA In-Depth Tax Course and in 2012, Grant received the CA Community Service Award and the Scout Leader Medal.