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MANY companies usually favour delegating duties to various individuals for it is believed that apportioning responsibilities reduces the likelihood that errors (intentional or unintentional) will remain undetected.
Separate processing by different individuals at various stages of a transaction allows for independent reviews of the work performed.
Dividing duties provides four primary benefits: Firstly, the risk of a deliberate fraud is mitigated as the collusion of two or more persons would be required in order to circumvent controls. Secondly, the risk of legitimate errors is mitigated as the likelihood of detection is increased; thirdly, the cost of corrective actions is reduced as errors are generally detected relatively earlier in their lifecycle.
Fourthly, the organisation’s reputation for integrity and quality is enhanced through a system of checks and balances.
Delegating duties is a basic, key internal control function, but it remains one of the most difficult to accomplish.
In essence, there is greater assurance that internal control responsibilities will be fully deployed when there is increased dispersion of such responsibilities among multiple individuals and work groups.
In as much as separation of duties is a key internal control measure, it is clear that some duties are duplicated in organisations. You might find that one company might employ a Finance Director, Chief Financial Officer, Finance Manager, Assistant Finance Manager, Accountant, Assistant Accountant, Financial Accountant and Management Accountant. In cases such as this one, it is not uncommon that about two individuals of the lot will be the busiest, while the rest often kill time on social networks and playing FIFA games in the office.
It is undoubtedly good to separate duties but at times it may not be necessary as it will prove costly in the end.
Would you want to be an employer who pays employees to spend the whole day on social networks without adding value to the organisation? In cases where duties cannot be fully divided, mitigating or compensating controls must be established.
Mitigating or compensating controls are additional procedures designed to reduce the risk of errors or irregularities. For instance, if the record keeper also performs a reconciliation process, a detailed review of the reconciliation could be performed and documented by a supervisor to provide additional control over the assignment of incompatible functions.
Separation of duties is more difficult to achieve in a centralised, computerised environment.
Compensating controls in this arena might include passwords, inquiry only access, logs, dual authorisation requirements, and documented reviews of input/output.
In Harare, I have been to so many Government offices. There are some offices that are always extremely busy and there are some were people are usually idle. Indeed, Government should be the top employer and provide citizens with jobs, but whoever is employed should actually be able to perform.
In most cases, companies need to conduct a staff audit. It might be unsustainable, for example, for a company that generates less than US$20 000 per month to employ more than 10 people.
An ideal payroll should be at least 30 percent of total revenue. The case may be slightly different for start ups as start-up costs may be high.
However, it is always vital to know when to recruit new employees.
Some entrepreneurs employ for the sake of “image and prestige”, but often times this always creates problems as most of the time the entrepreneurs eventually fail to pay salaries.
Employ because there is a critical need to do so.
There is no point employing someone for a role that can be done by yourself or someone else who already fulfils those tasks. Do not employ for the wrong reasons. Employ because there is a need.
Zimbabwe has been plagued by retrenchments of late. The main reason is to probably to cut costs.
But what it noticeable is that the retrenchments are not accompanied by any operational disruptions, a development that might be an indication that most of the retrenched staff duplicated duties.
If you were to conduct a human resources exercise survey for about three months and ask each employee in your company to give you a weekly report on tasks that they will be working on, you may be surprised that maybe one simple task is being done by more than three people.
Employees must be paid to work and not to spend most of their time on social networking sites such as Facebook and using company resources such as telephones without contributing much to the company.
From time to time a productivity versus budget analysis should be done.
I have personally noted that at times too many cooks spoil the meal.
Having so many people in any organisation can actually reduce efficiency. The less the team the more efficient they are. If a task is not completed, it will be easy to identify who was responsible.
In an organisation with so many employees, often there wil be so much blame game.
As you consider recruiting, always ensure that the role to be filled is truly relevant.
Taurai Changwa is an Articled Accountant and ACCA finalist. He is managing director of SAFIC Consultancy.
He writes in his personal capacity and can be contacted at [email protected] or visit our facebook page SAFIC Consultancy or whatsapp on 0772374784.
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