Table of Contents
1. Accountant's role
Internal controls are the safeguards to ensure all the information represented on your financial statements is accurate. Your internal accountant working with your CA will be the key overseers in managing all internal controls.
2. Checklist of Internal Controls
- Separation of income and expense functions. For example, have different people handle accounts payable and accounts receivable.
- Separate authorization, custody, and record keeping roles. Your CA can make recommendations that are appropriate for your business.
- Have bank statements mailed to a separate (or home) address of a managing authority or yourself. Bank statements and checks cashed can be independently reviewed.
- Do not delegate sign-off of payments
- Establish maximum limits of purchasing authority.
- Require all payments be supported by invoices.
- Require bids on all purchases over a stated limit.
- Inventory controls:
Inventory, similar to cash, can disappear very rapidly through carelessness or employee dishonesty. Require authorization for who can sign for goods and services and who controls the release of goods and services out the door after the processing has been completed. Separation of incoming and outgoing duties is recommended. - Rapid delivery companies and just-in-time assembly systems are great tools to use to minimize your inventories. The cash you free up can be put to uses that are more productive.
- Verify that insurance policies are in force and premium payments are current. View our “Top Ten Do’s and Don’ts” of insurance coverage in the Start a Business Course.
- Internet technology security management in place or outsourced. Your IT consultant or manager should write out the IT policies.
- Edit log for website changes and updates. If your business deals with e-commerce, you need to establish a log procedure for control of who and how edits to your website are to be made. All changes or edits to the site should be made through a designated employee. Your computer technology consultant can show you how to administer this tool.