When was the last time you gave your business an internal checkup? For any business, having internal accounting controls in place are vital and should be a part of everyday procedures. They should help prevent fraud and employee theft or detect it early.
Here’s a checklist of what you should look at when reviewing your internal control procedures. Please note, this is not an all-inclusive list and it isn’t a substitute for completing a thorough internal control analysis.
Cash
- Are cash handling and cash record keeping duties segregated?
- Are all expenditures authorized and documented?
- Do you conduct unannounced checks of petty cash and other cash accounts?
- Do you prohibit any single employee from handling a transaction from start to finish?
- Do you deposit all receipts intact to the bank daily?
- Do you prepare bank reconciliations?
Sales
- Do you have proper segregation of duties to prevent an employee from pocketing cash from a sale without reporting the sale?
- If you don’t have enough employees for adequate segregation of duties, do you have an active role in monitoring the sales activities?
Accounts Receivable
- Are different employees responsible for different duties associated with accounts receivable?
- Do you account for and physically control returned merchandise?
- Do you bill customers promptly?
- Is an accounts receivable aging schedule prepared regularly?
- Do customers receive monthly statements?
Inventory
- Are inventories physically counted at least annually?
- Is central control over inventories maintained?
- Are perpetual inventory records maintained?
- Is inventory adequately insured?
- Do you maintain safeguards against theft and pilferage?
Fixed Assets
- Are fixed assets acquired only with proper authorization?
- Do you take regular inventory of fixed assets?
- Are discrepancies between physical counts and accounting records resolved?
- Are fixed assets adequately insured?
- Are small tools and supplies properly safeguarded?
Debts
- Is there proper authorization for the creation of any debt?
- Are liabilities promptly recorded?
- Are accounts payable checked for accuracy?
- Are bills paid only when the merchandise has actually been received?
- Do you take advantage of vendor discounts?
Stock
- Are designated officers the only ones allowed to sign stock certificates?
- Are stock certificates prenumbered and carefully accounted for?
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