Happy New Year

The start of a new year makes the perfect opportunity to review internal controls within your and your clients’ companies. Here is a checklist of simple controls to get you started.

Implement a strict hiring policy

  1. Past employment verification – no exceptions, call them!
  2. Full national criminal background checks.
  3. Perform credit checks if applicable.
  4. Education verification and reference checks, call them!

Develop & follow written policies and procedures

  1. Provide written guidance for all employees and set standards and expectations of job performance.

Establish an effective fraud reporting mechanism

  1. Train employees about their duty regarding fraud.
  2. Educate employees about HOW to identify & communicate issues.
  3. Utilize an anonymous reporting channel (i.e. hotline) where practical.
  4. Ensure vendors & customers are aware of the reporting mechanism.

Identify Potential Risks to the company

  1. Monitor for vulnerabilities & implement procedures over those areas.

Verify separation of duties throughout all financial areas

  1. Establish regularly scheduled job rotations to minimize interruptions in the event of unexpected absences and as a deterrent from fraud.
  2. Make vacation time mandatory for all employees, with different employees covering job duties in their absence.

Utilize system & physical controls when possible

  1. Only allow authorized users to access sensitive financial information.
  2. Require unique ids and passwords with a strict no sharing policy.
  3. Limit access to spaces containing sensitive information with trackable badge swipes or access codes.

Increase the perception of detection

  1. Perform random spot checks of paid invoices, bank reconciliations or other financial transactions that employees may think are overlooked.
  2. The perception of strong internal controls is likely to decrease your chances for fraud.

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