In order to protect your business you must regularly evaluate internal controls. Doing so will ensure effectiveness and efficiency of operations and support reliable reporting. Here are five internal controls your company should evaluate:
Do you have a signature stamp, with your signature at the office? WHY!? Having a signature stamp is like signing blank checks. Furthermore, locking the stamp in a drawer where only a “trusted employee” has access is not the answer. Authorized signers need to be consistently present and aware of financial transactions. Consider an electronic system such as ACH payments.
ACH payments and wire transfers – this can be set up for someone to initiate and someone else to approve. The use of separation of powers is key!
3. Single User/Password
Many companies share one login to their bank, accounting software, credit card, etc. Make sure each user is set up as an authorized user and you can set the rights for each person. When people leave the organization, make sure to delete the username and change common passwords.
4. Expense Reimbursement
Implement a process for all employees to follow regardless of hierarchy. Make sure to have an annually updated policy and require receipts/invoices over a certain dollar amount. If you have corporate credit cards, you can restrict the types of goods/services they are used for via merchant category code. Call your card company for assistance.
5. Payroll Responsibilities
Segregation of accounting duties is key. Make sure you have at least two people in the process by having a checks and balances system in place.
All of your company’s controls should be updated every year. Make it part of your annual shareholder meeting – hopefully you are having an annual shareholder meeting (and documenting it)!
Contact us if you need assistance with getting your internal controls in place or have other accounting and finance needs.