Under Staffing

Under staffing in an organization can solve immediate financial duress but ultimately in the long-term causes larger issues. Requiring extra overtime hours and extra work to fit in the normal work day can take a toll on your employee’s attitude and can affect the way your customers feel about your service or product. I am in no way saying a little extra overtime is a bad thing with the Holidays approaching, but rather there needs to be a balance. Long-term, unhappy employees eventually make for unhappy bosses. Requiring one employee to accomplish the job that it once took four employees will negatively affect an organization’s culture. I would argue that this employee now feels self-entitled and is more likely to commit fraud. He or she can easily rationalize that they are worth more and most likely their perceived opportunity to commit fraud is higher. When you cut staffing you need to rethink your internal controls and your last risk assessment over that specific area. More mitigating controls will most likely be needed.

In the accounting industry when we hear clients are under staffed, we immediately wonder what impact this will have on their ability to achieve segregation of duties. Segregation of duties is the concept of having more than one person required to complete a task. It is an internal control intended to prevent fraud and error. There is often a distinct difference between what is thought of as the “ideal” segregation of duties in an organization and what is financially feasible for an organization.

Every organization’s employee count will be different for their “ideal” segregation of duties and may not be financially feasible. Mitigating controls can often be put into place to help achieve a decent segregation of duties without hiring additional employees. At some point, differing for each organization, segregation of duties cannot be achieved by additional mitigating controls if the employee count is too low. Obviously organizations need to be solvent and additional employees may push them over that edge, but they also need to understand the implications of their actions.

If your organization would like to discuss any fraud related topics further, please email me at dhammarberg@macpas.com.