Problem:
Can I get positive feedback
Employers put themselves at financial risk regularly. Our chapter 10 reading states, "...Friedman believes that markets can function effectively and efficiently only when rule-based conditions are met. It is universally recognized that markets must function within the law and be free from fraud and deception." (Hartman, DesJardins & Macdonald, pg 104). Even if a company reports mistakes, even those not intended to be deceptive, can still face fines and hurt its reputation. For example, I have worked with grants in the past and most specifically state what and how the money should be spent. Reporting issues like misappropriations of grant funds can lead to the grant being revoked.
One way companies can avoid financial risks is to adhere to the regulations set forth by the Sarbanes-Oxley Act of 2002. This act requires companies to have more roles for board members to oversee financial activity. It also defined the scope of the auditors' role in reviewing financial statements. As we have discussed before, in companies that have strong a strong mission and core values, fraud and deception will not be the norm. It is the responsibility of upper management and HR to make sure employees know and understand these values, especially by mirroring those values in the way they lead. Aligning with this, another way to avoid risks is to make sure all employees are trained properly once they are onboarded with the company. Special care should be taken also for employees in those higher-risk areas such as accounting and finance. Internal should be implemented so that one person is not in charge of an entire process.
When I worked in payroll, we had many procedures that prohibited us from performing any payroll function completely ourselves. One example was, we could not approve our own timesheet. Even though employees had the ability to do, it was an auditing issue. Each month I would need to remind several employees across our campus that they could not submit and approve their own timesheets. Pretty much 100% of these people did not maliciously or to try to turn in a fraudulent time sheet but they just wanted to get their payroll completed and did not want to wait for a supervisor to approve it. Our internal audit on this was to run a report that would show us employees who approved their own timesheets, so we could contact them and correct the issue. Another example I saw in Payroll was employees putting hours in a different pay period because they forgot to add it to the correct pay period. This is timesheet fraud and a very serious offense. My main job on campus was payroll training, to make sure people knew and understood our payroll regulations as well as state and federal regulations. Training is an extremely important role in HR to avoid these types of risks, in payroll but in also all areas of the company. Training also helps supervisors, management, and board members understand that risks companies face are a responsibility they must take on by having a leadership role in the company. I would stress in my training that compensation plays a role in this as well because supervisors, managers, etc. are being compensated more by having the responsibility to make sure procedures and policies are being followed correctly by their employees. Of course, there is personal responsibility but managers are a key piece in the checks and balances.