Small and medium enterprise companies are in run to become larger companies and working hard to make profits for its shareholders and bring better lifestyle for its stakeholders including its employees. One of the major areas these companies spend time is in saving cost where they can. In aim to reduce/optimize costs the structure of companies are worked around finding people who can multitask and achieve the process goals with minimum resources.

The people who grow in SMEs are based more on level of Trust the management hold on them. Though trust is one of the most important factor in any organization but at the same time can induce opportunity window, as very well listed in fraud triangle noted below,

The opportunity window has a potential to corrupt people and may lead to losing millions out of the companies. A Trust position always has this window of opportunity open since there is a high level of Trust and very minimum check and balances.

Trust is good but blind trust can be counterproductive. It does not mean that people at Trust positions always use the position for gain but at times personal positions become so demanding that “easy temporary gain” slowly becomes a “permanent gain practice” and corrupt people.

Thus, it is always better to put such control and practices at Trust positions that there is always a sense of check to ensure people do not divert towards “easy temporary gain”. Some of good practices could be as below,

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• List the Trust positions (without putting data to who is holding such positions)

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• List all the activities been carried out by such positions

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• Red color the areas where the person incharge has a possibility to manipulate the information and present the way he/she wants to without been questioned or trigger an alert

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• Brainstorm if these red areas can reshuffled or re-allocated

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• If re-allocation is not practical, put surprise audit check practices there.

These small changes can save millions without hurting the Trust positions and ensuring SME’s get bigger strongly and become large productive companies.

Article prepared by: Rishi Chawla – Audit Partner, Premier Brains

This document is only for information purposes and should not be construed as an advice. It does not necessarily cover each aspect of the topic with which it deals. You should not act upon the contents of this document without receiving formal advice on your particular circumstances.

If you would like to discuss any audit related matters, please drop us an email at info@premier-brains.com or call us at + 971 4 3542959.

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