Follow-Up Feedback Control Checks and Implications of Poor Control Processes
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Follow-up Feedback Control Checks
To ensure adherence to the strategies I have established for compliance within IndiasafeInvest, I would use three follow-up feedback control checks. The first is the individual performance, where I would use data generated from performance metrics to inform each individual in the workplace of their individual performance in meeting benchmarks, standards, and goals that govern performance expectations in executing fraud-free tasks. Such data can assist in isolating individual performance and better instructing and motivating each employee on areas of individual performance requiring improvement continuously. Slowiak and Lakowske (2017) suggest that good individual performance feedback reinforcing positive behaviors. These behaviors ensure ethical and value-based employee functioning, which is vital to avoiding malpractices such as fraud.
The second follow-up feedback control check involves interactive team performance. I would use agile approaches such as Scrum or Kanban to create an interactive team feedback loop, which would offer metrics for establishing whether or not in-progress work by teams of employees meets the set performance expectations. I would accumulate sufficient team performance data to compare team performance against set standards and guide decisions on how to improve team efficiency and performance towards meeting those expectations, hence adjusting team processes adequately.
The third follow-up feedback control check to use includes validation assessments. Both comparative and descriptive validation assessments are essential follow-up feedback control checks because they target specific employee attributes underpinning their behaviors in the workplace. Validation assessment will be important in ensuring compliance at IndiasafeInvest in that they will direct and refocus training initiatives aimed at improving employees’ abilities to meet the unique demands of their specific tasks (Tracey and Tews 2005). Validation assessments would allow for the use of data to carry out performance comparisons to establish progress, hence tailoring employee training to align with competencies of performing specific tasks ethically and without engaging in malpractices.
Implications of Poor Control Processes
Poor and ineffective controls and control processes have serious potential ramifications for IndiasafeInvest, its employees and customers, and other organizations. One of the implications for the staff is the augmentation of temptations for fraud. Weak controls characterized by the inability to monitor individual employees can cultivate new opportunities for staff members to commit fraud as it happened at IndiasafeInvest. This means that in the presence of weak, passive, and ineffective control processes, employees can leverage weaknesses in the firm’s financial systems, hence getting tempted to take chances to commit financial fraud as Nawawi and Salin (2018) suggest. Also, poor control processes have the potential implication of impairing employee’s system of ethics and values. The rationale for this implication is that poor control processes mean that employees can compromise passwords, accounts, and critical financial data to engage in unethical practices that taint their value systems.
For customers, poor control processes can cause a loss of customers’ trust for the company. The reason for this is that customers may develop perceptions that the company betrays their trust by failing to maintain proper and sound control processes aimed at detecting fraud incidents promptly, hence safeguarding customers’ financial assets entrusted to the company. Also, poor control processes can increase the possibility of compromising client data privacy (Cheng, Liu, and Yao 2017; FSA 2008). Although the fraudulent incident at IndiasafeInvest had no impact on customers’ data, poor control processes can increase the chances of breaching client data protection mechanisms culminating in their data privacy being compromised, especially if fraudulent activities remain undetected for overly extended periods.
One implication of poor control processes for IndiasafeInvest is the financial losses that occur when thefts and unauthorized transfers occur without being detected. Another implication is damage to its corporate image. Due to the presence of poor internal controls for monitoring individual employees, the fraudulent incident in this company remained unnoticed for a long period. Consequently, the slow detection of fraud affected the image of the company’s integrity, ethics, and values, indicating that poor control processes can damage a firm’s overall corporate image as Hermanson, Ivancevich, and Ivancevich (2008) submit. Lastly, poor control processes can have serious implications for the reputation of IndiasafeInvest. This is because customers’ perceptions of trust betrayal coupled with the loss of positive corporate image due to the absence of proper control processes can translate to a bad reputation for the enterprise.
The potential implications for other organizations are similar to those for IndiasafeInvest, which include financial losses and damage to organizational image and reputation. Examples of other organizations that have experienced similar fraud issues as a consequence of ineffective control systems are HSBC Bank, Citibank, and Commonwealth Bank. At the key investment center of HSBC Bank in Bangalore, ineffective control systems promoted thefts of data by an IT employee. Also, ineffective control systems facilitated the theft of client account information at Citibank. At the Commonwealth Bank, a manager exploited ineffective control systems to steal nearly $500,000 while failing to report a fraudulent transfer of $64,000 by an employee to a personal account to conceal his fraudulent incident.
Reference List
Cheng, L, Liu, F, and Yao, D. D, 2017. Enterprise data breach: causes, challenges, prevention, and future directions. Wiley Interdisciplinary Reviews: Data Mining and Knowledge Discovery, 7(5).
FSA, 2008. Data security in financial services. Financial Services Authority Report. London: FSA.
Hermanson, D. R, Ivancevich, D. M, and Ivancevich, S. H, 2008. Building an effective internal audit function: Learning from SOX section 404 reports. Review of Business, 28(2), p. 13.
Nawawi, A, and Salin, A. S. A. P, 2018. Internal control and employees’ occupational fraud on expenditure claims. Journal of Financial Crime, 25(3), pp. 891-906.
Slowiak, J. M, and Lakowske, A. M, 2017. The influence of feedback statement sequence and goals on task performance. Behaviour Analysis: Research and Practice, 17(4), p. 357.
Tracey, J. B, and Tews, M. J, 2005. Construct validity of a general training climate scale. Organizational Research Methods, 8(4), pp. 353-374.
