Internal Controls Week - Part 4 - IC Quick Reference

 

INTERNAL CONTROLS (IC) QUICK REFERENCE

 

ICs are a risk prevention and a risk mitigation system; an accounting process and an element of organization’s culture

 

Segregation of duties IS THE MOST IMPORTANT control

 

The objective is reasonable assurance NOT perfection

 

Basic techniques are well known and must be implemented

 

          Policies and procedures custom designed for organization

          Employee screening, training, retraining and supervision

          Relentless (not nasty) supervision and support

          Accounting system elements design fitted to the company

                   Approval and authorization

                   Document movement and retention paths

                   Physical control of assets

                   Verification processes

                   Reconciliations of transactions/documentation/ cash

                  

Information system controls designed for the organization

External review and audit used as required

 

Internal controls Week Part 3 - Employee Theft

 

https://tomealey.substack.com/p/types-of-employee-theft

Internal Controls Week Part 2 - Risk Management

 Risks, including financial risks,  can be battled with a well-known set of management principles.

 

The primary rule of risk management is PREVENTION with internal controls, then

 

If a risk event happens, detect and mitigate the damages, then

Use risk transfer to mitigate damages (usually insurance), then

Prevent recurrence of the risk event

Internal Controls Week Part 1

 Internal Controls Defined

 What do we mean by internal controls?  How are internal controls defined?

 The rules and procedures implemented by an organization to ensure the integrity of financial and accounting information, promote accountability, and prevent fraud.

 Definition by the: Committee of Sponsoring Organizations. COSO was organized in 1985 to sponsor the National Commission on Fraudulent Financial Reporting, 

 

 Our comment:

 The controls, policies and procedures customized for the organization – type of business, product/service, ownership format, physical location, work force and location.

Excepted from 

Internal Controls and Embezzlement Protection

Small Business Edition    (c) Tom Ealey 2024

Now is the Time! (Year End Governance)

 The New Year triggers a lot of accounting, tax and governance issues and tasks.

Now is the time to get organized and get a checklist together of year end and year beginning tasks.

The key players in this are your accountants and your legal counsel. The accountant for certain, and maybe the legal counsel. 

Ignoring governance tasks, such as board meetings, can have no consequences or huge consequences.

Do not have a relationship with a business law attorney? This is the year to fix that omission.

Happy New Year!

Now is the Time! (Year End Accounting)

 Now is the time to start getting your year end tax work ready for the accountant.

Of course some materials will not arrive until January, and some information cannot be processed until after December 31st.

But now is the time to double check your bookkeeping procedures, schedule the work necessary to do year end payroll, payroll taxes and payroll forms, and to look for weaknesses in the accounting system or inadequacies in your staff.

If you have any questions about your relationship with your accountant - as regards accounting or tax, now is the time to clarify the relationship. Busy season is so named for a reason.

NOTE!

New rules apply to 1099 electronic filing, and these rules will impact many small businesses. Check with your accountant.

My Accountant Just Raised My Tax Return Fee

So your accountant just sent you a letter with a X% increase for your tax service.

What? Why?

Higher labor costs. There is a shortage of qualified accountants.

Higher technology costs. Needs more and better technology.

Higher insurance costs. More risk.

So that is why your accountant is raising fees.