Focus on: Financial Controls - Internal Controls Are Vital to Eliminating Fraud
Checks and Balances
The best way to guard your business against fraud is to implement sound internal controls. Essentially, internal controls are checks and balances that help prevent fraud, limit financial losses and reduce errors or oversights by employees.
The most basic internal control concept requires that different employees handle different financial and accounting tasks. This process, called “separation of duties,” decidedly limits the probability of loss. The following basic internal control checklist includes suggestions that, once implemented, will help you avoid theft and fraud in your business:
- Have one person open the mail and list all the checks on the deposit slip while another enters cash receipts in your financial records.
- Put someone who does not handle the checkbook or purchasing in charge of payments to suppliers or vendors.
- Have your bank reconciliation done by someone who does not have access to daily checkbook transactions.
- Take responsibility yourself for approving all vendors and counting all goods received.
- Check all orders to make sure they are accurate and of the quality intended.
- Before signing each check, review the invoice, delivery receipt and purchase order.
Keeping your financial controls top of mind will help avoid unneeded stress of errors and fraud. Following the basics sited above will get you focused on financial controls and allow you to focus on what you do best…growing your business.