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
- Past employment verification – no exceptions, call them!
- Full national criminal background checks.
- Perform credit checks if applicable.
- Education verification and reference checks, call them!
Develop & follow written policies and procedures
- Provide written guidance for all employees and set standards and expectations of job performance.
Establish an effective fraud reporting mechanism
- Train employees about their duty regarding fraud.
- Educate employees about HOW to identify & communicate issues.
- Utilize an anonymous reporting channel (i.e. hotline) where practical.
- Ensure vendors & customers are aware of the reporting mechanism.
Identify Potential Risks to the company
- Monitor for vulnerabilities & implement procedures over those areas.
Verify separation of duties throughout all financial areas
- Establish regularly scheduled job rotations to minimize interruptions in the event of unexpected absences and as a deterrent from fraud.
- Make vacation time mandatory for all employees, with different employees covering job duties in their absence.
Utilize system & physical controls when possible
- Only allow authorized users to access sensitive financial information.
- Require unique ids and passwords with a strict no sharing policy.
- Limit access to spaces containing sensitive information with trackable badge swipes or access codes.
Increase the perception of detection
- Perform random spot checks of paid invoices, bank reconciliations or other financial transactions that employees may think are overlooked.
- The perception of strong internal controls is likely to decrease your chances for fraud.
