Efficiency, Effectiveness and Internal Controls-You can have it all!
Whether you use Great Plains, Sage, Quickbooks Online, or Quickbooks Enterprise, all of these accounting systems have reporting and features that allow increased efficiency, effectiveness, and stronger internal controls. The key is implementation and getting value out of the current accounting system.
In a recent course I attended, we reviewed the statistics of fraud in small organizations. The statistics revealed a higher incidence of fraud in smaller businesses/associations yet a lower average dollar loss compared to big business. Strong internal controls can reduce the risk of fraud, but not eliminate it. As business owners/directors, your responsibility is to take reasonable measures to prevent fraud and misstatement of the financials.
The good news is through embracing technology, good processes, and reporting, your organization can be better without a struggle. Here are a few basics that any organization can implement:
- Set up users with the appropriate permissions for tasks that promote segregation of receiving payments, making payments, payroll, etc. If vacations or other absences require one employee to fill in for another, add the temporary permissions to the backup employee profile and don’t share passwords. This will allow management to routinely run reports based on users to review transactions. If log-ins are shared or everyone has admin rights, the reports won’t help you spot problems.
- Have your customers/clients/members make payments electronically. Paper checks take time to secure and deposit. If your website and invoicing don’t have these options consider making this a priority. If you must have paper check payments, have them directed to a bank lockbox. If you are a service business, equip your technicians to take payment at time of service.
- Pay your vendors electronically using electronic approvals. Having two signatures on a check sounds like a good idea, but it is just not very efficient and how can you know that checks aren’t being disbursed without two signatures? Electronic approvals allow you to set up multiple approvers and approve payments anytime/anywhere. The invoices should be scanned, recorded, and sent for electronic approval. This allows easier management of cash flow as you can get reports as to what is queued up to pay and when.
- Reconcile banks statements monthly and have them reviewed by you, your CPA or a board member. It is important to review the cancelled check images and look for manual checks or odd signatures.
Need help getting some of these ideas implemented?
Strong internal controls protect the organization and the employee. Well defined processes make the daily tasks easier, improve customer service, reduce errors, and allow more time for additional valuable contributions by your team. Let us help you get started on improvements today.