Establishing Internal Controls
When we say the phrase, “Generally accepted accounting principals”, we are referring to a set of standards for the preparation of financial statements. These standards are designed to do two things primarily: to provide a guide for managing the financial activities of the business and to protect its assets. That protection takes the form of appropriate controls over the handling of your resources to prevent theft and mismanagement.
In order to evaluate the security of your operations, it is wise to periodically obtain an outside professional to review them and ensure that sufficient controls are in place. An outside resource means a well-trained and unbiased set of eyes will look at the efficiency and security of your system. This lends strength to your company and encourages growth and increased profitability.
An accounting firm can help you:
- Segregate duties between people so that no one has complete control over any aspect of financial transactions. This reduces the possibility of human error and theft.
- Establish an authorization policy to make sure that all financial transactions are approved according to your wishes.
- Ensure that accounts are reconciled by a neutral party to determine whether transactions have been processed accurately.
- Ensure that inventories, cash and assets are properly secured and tracked to minimize theft.
- Ensure that employees have sufficient job knowledge and supervision to perform their duties efficiently with no impropriety.
- Document policies and procedures to provide continuity in the event of sudden staff changes and as an employee reference.
- Review operations for compliance with your management plan.