The Relationship Between Turnover and Internal Control Weaknesses

This blog was authored by my colleague Folashade Abiola-Banjac, a principal within our financial services forensic group.

Everywhere you turn you see headlines of fraud and misappropriation of assets happening at all levels of financial institutions.  However, turnover and its relationship to internal control weaknesses is a challenge to understand. 

Internal controls only work if all members of an organization adhere to them.  However, what happens when the controls are weak and the leadership keeps changing? There is a lack of consistency and the adherence to the internal controls in place. CLA recommends the following for financial institutions to gain an understanding and assess whether turnover has impacted internal controls:

Fraud risk assessments

If an organization has experienced a high level of turnover a fraud risk assessment is a good opportunity to assess whether there are possible issues that need to be addressed.

Forensic Investigation

If an organization has experienced a high level of turnover within the C-Suite and the leadership of the institution it is best to conduct a forensic investigation to ascertain whether a forensic event is the reason for the departures.  Further, an investigation clears the way for the installment of a new members of leadership with documentation of what took place prior to their new leadership roles.

If you have experienced turnover in your institution please Contact Us to assist your institution in a conversation to discuss possible frauds risks and their potential impact.