Internal Controls in Accounting
Having a controlled accounting environment in place is important. You can also outsource professional accounting and bookkeeping services for a fraction of the cost.
Having a controlled accounting environment in place might be one of the most important things that we can do. Accurate financial information is vital for any company. Among the things that we need to have is proper records, monthly financial reports, a good accounting system and the appropriate internal controls. In order to have a professional accounting system, you need a professional supervising it, this doesn’t mean that you need to hire an in-house accountant. You can also outsource professional accounting and bookkeeping services for a fraction of the cost and still have great results.
So, what are we looking to control when we set up accounting internal controls? If we look at it as a big picture, we are looking to avoid any accidental or intentional loss of money, we also want to avoid any type of law issues and we also want to be able to monitor if we are achieving the goals that we are supposed to reach in a given period of time.
Some of the internal controls that we want to have are:
Documentation control; any transaction should have some kind of document backup, the problem with the accounting software is that it is only as accurate as the information that we put in it and unfortunately, mistakes are something that can happen when people is involved in this process. It is important to have a paper trail just in case we need to find out more if we encounter any discrepancies in our financial records.
Cash control; controlling the cash is an important part of the accounting controls. Cash should only be allowed to be accessed by as few employees as we can manage. You need to keep a close control of who handle the cash, the dates and the times. Make sure that you compare your bank accounts each month and that the deposits made by employees correspond with the dates that your information shows based on the internal documents. Having cash lying around is not a safe way to handle cash, make sure that you have it locked safely until you make the deposits. In the case of cash registers, if you have many handling money, it is a good idea to have some type of authentication software so you know who accessed any machine and when. The same principle applies to refunds, credits and payroll. Just make sure that you know who is handling your money at all times.
Security control; security is very important in accounting, it is not only about the cash, it is also about all the sensitive information about the company. There must be physical and electronic security in place. You should make sure that your data is properly secured and that only a few people is allowed to handle important information. Security is also about separating tasks, it is a smart move to have different people handling accounting and cash, a person who handles the information that is stored and reported shouldn’t be the same that handles the money.
Finally, there’s the auditing control; it is important to perform audits periodically so we make sure that things are going exactly the way we want. Remember to get help from professional accounting and bookkeeping services.
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