15/09/2022

15/09/2022

Accounting Policies – Internal Controls

The overarching objective of the financial statements is to provide information relating to the financial position, performance and cash flows of the company that is useful and will help users of those financial statements make rational, economic and informed decisions about the company.

Responsibilities within your business:

Have you determined who is responsible for the accounting-related tasks in your business?
  • Cheque signing authority
  • Ensuring controls and compliance systems are in place
  • Reviewing and approving all payments 
  • Reviewing and approving all adjustments to the general ledger 
  • Reviewing and approving all accounts receivable write-offs
  • Reviewing a payroll summary of hours worked and pay amounts
  • Approval of Budgets
  • Approve the monthly financial reports
  • Annual review of financial internal controls
  • Reviewing and approving all invoices 
  • Approve all employee expenses
  • Approve all inter - account and intra - account transfers
  • Review all bank reconciliations
  • Review the payroll summary for the correct payee, hours worked and payment amount.
  • Approve all reimbursements
  • Coordinating tax preparation
  • Maintenance and reconciliation of the general ledger monthly
  • Performing the period-end closing procedures
  • Timely and accurate production of financial statements
  • Managing the accounting record files 
  • Maintaining the Personnel files
  • Tracking and maintaining a log of Long Term Assets
  • Performing bank and G/L account reconciliations
  • Documenting, seeking approval for, and recording adjusting entries in the general ledger
  • Assembly of the company's annual budget
  • Processes all receipts and disbursements
  • Processes the payroll, including payroll tax returns
  • Manages the petty cash fund
  • Reconciles the bank accounts
  • Double-checks all reimbursement requests against receipts provided
  • Receives and opens all mail 
  • Separates cheques and prepares a log of the receipts
  • Separates the accounts payable invoices and creates a log totalling the invoices received for the day
  • Mails all Accounts Payable cheques and remittances including any payroll or reimbursement cheques that need mailing
 

Controls over Trade Receivables

  • Do all sales have an accepted contract or sales order
  • Are sales billed promptly e.g. event billing or at month end
  • Are procedures in place to accept new customers
  • What is the policy for assigning risk to unpaid sales e.g. unpaid for over 60 days
  • Is there division of duty within your organisation between 
  • Determining credit limits
  • Maintaining the customers’ standing data (contact details, credit limits etc)
  • Invoicing and credit notes
  • Recording of cash collection and refunds
  • Reconciliation of ledgers
  • Does your business have systems in place to assess the credit-worthiness of customers
  • Risk profiling
  • Credit checks
  • Assessment of customers' financial accounts
  • Setting of credit limits
  • Who reviews your business’ trade receivables for bad debts and who authorises the provision
 

Controls over Trade Payables

Accounts Payable is the process of keeping track of Company’s financial obligations.  It involves the issuance of purchase orders, acceptance of invoices from suppliers, recording the invoices in the computer system, and payment to suppliers.    
  • Are controls in place to require senior management of purchases over certain limits
  • Are approved purchase orders in place 
  • Are checks in place to ensure the goods or services were properly received
  • Who controls the suppliers’ standing data – bank account details, contact details
  • Are phone checks with the supplier done to confirm bank account details over certain limits
  • Who can approve new suppliers
  • Are price comparisons required over certain purchase limits
  • What checks are carried out to approve an invoice for payment 
  • What background checks are done on new suppliers to ensure their independence and good-standing
  • Is there proper segregation of duties
    • Who can amend suppliers’ standing data
    • Who can authorise purchase orders, deliveries, invoices
    • Who approves suppliers’ invoices for payment
    • Who authorises the payment
    • Who maintains the trade payable ledgers
    • Who reconciles the trade payable ledgers