The division of responsibilities undoubtedly plays a vital role in building effective work processes in the company. Delegating makes it possible to narrow the circle of responsibility for each specialist in the company, giving more opportunities for quality work (Osman, 2019). If, for example, the same person is responsible for the custody of assets and at the same time maintains accountability for the distribution of those assets, he or she has virtually unlimited access to the company’s resources. Such a specialist can falsify data to disguise their illegal financial transactions, ultimately resulting in significant losses for the company.
The accountant in the first example, Lisa, who discovered some errors in her subordinate, encountered a problem in which improper actions on the part of the specialist led to significant losses for the company. This situation shows that a managerial error has been made. To correct it, Lisa should divide her subordinate’s duties with another employee and see if her performance changes. Besides, in this situation, conducting an internal audit can become a good technique to solve the problem. Any financial operation between the accountant and customers should be reconciled.
In the second example, Michelle does not trust her subordinate, who accepts money from customers in cash and possibly embezzles some of it for herself. Michelle should hire a separate person who takes money from clients and a particular person who has to write reports. This solution will allow firstly to understand if there have been any irregularities in the past, and secondly, it will eliminate the risk of their occurrence in the future.
Both examples show the managerial weaknesses of two types: in the first case the accountant faces an operational problem, in the second one – the manager has to fix and administrative control weakness. The recommendation for Liza can be reduced to conducting an internal audit that helps to control all the operations produced by accountants. It will allow the company to reduce the risk of losing short- and long-term assets of the company. The administrative control weakness in the second case may be fixed by delegation of responsibilities of getting cash from clients to another specialist. Moreover, the specialist should work with the equipment that receive money and count them automatically. This decision will also prevent the losses of assets and will help to increase the indicators of liabilities as well as stockholders’ equity.
Reference
Osman, H. (2019). Effective delegation of authority: A short book for new managers about how to delegate work using a simple delegation process. Independently published.