What control measure can be implemented to reduce the risk of employee fraud?

Implementing segregation of duties is a critical control measure to reduce the risk of employee fraud. This practice involves dividing responsibilities among different employees to minimize the opportunity for fraudulent activities. By ensuring that no single employee has control over all aspects of a financial transaction—such as authorizing, processing, and reviewing—the organization creates a system of checks and balances. This not only makes it more difficult for any one individual to commit fraud without detection but also promotes accountability among employees.

For example, if one employee is responsible for processing payments, a different employee should be tasked with reconciling the records and reviewing transactions. This division of labor helps to ensure that any discrepancies or fraudulent actions are more likely to be caught by a colleague, thereby deterring potential fraudsters.

Other options, while beneficial for employee satisfaction or performance, do not directly address the control of financial transactions and risks associated with fraud. Reduced working hours could impact productivity without enhancing fraud prevention measures. Flexible work arrangements and remote working options can improve work-life balance but do not address the need for robust control systems designed specifically to mitigate the risk of fraudulent activities.