Internal Control/Anti-Fraud Program Design for the Small Business: A Guide for Companies NOT Subject to the Sarbanes-Oxley Act

CHAPTER 10 The Ceiling Documenting the Anti-Fraud Program

THE FOUNDATION IS SOLID, THE FLOOR IS DOWN, and the walls are up. It’s time to put a ceiling on the structure. That ceiling represents the information and communication elements of the anti-fraud program. The information aspect of the anti-fraud program addresses how to document the program sufficiently to enable employees, present and future, to properly function in their assigned roles. Chapter 11 presents the communication element.

INFORMATION

Remember, the employee serving in a position today may not be the same person in that position tomorrow. The cause could be a death, a retirement, a resignation, or a termination, but the effect is the same.

Everyone has probably played the telephone party game. All of the participants form a circle, and the first person creates a statement and whispers it into the ear of the person to the left. That person turns to the left and whispers the statement that was heard. The last person in the circle to hear the statement tells it out loud to everyone in the room. Seldom, if ever, does the final statement resemble the first statement. Such is the case with an unwritten, undocumented anti-fraud program.

Training new employees often omits important aspects of control activities that would be good for them to know. We forget, we get lax, and we tend to remember about half of the specific ...