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What asset control can help protect your company from fraud?

Posted by:

Dawn Loeffler, BA (Hons), CPA, CA Staff Accountant, Gilmour Knotts

Dawn Loeffler, BA (Hons), CPA, CA
Staff Accountant, Gilmour Knotts

Tax Question:

What controls should be put in place to protect the company’s assets from fraud?

 Facts:

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.

Discussion:

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.

Dawn Loeffler, BA (Hons), CPA, CA
Manager, Gilmour Group CPA’s
Email: faqs@gilmour.ca
Disclaimer: The information contained in this article is intended solely to provide general guidance on matters of interest for the personal use of the reader, who accepts full responsibility for its use. While we have made every attempt to ensure the information contained in this article has been obtained from reliable sources and accurately described herein. SW Media Group and Gilmour Group Incorporated is not responsible for any errors or omissions, or for the results obtained from the use of this information. Before taking any action that might affect your personal and business finances, you should consult a qualified professional advisor.

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