Internal Controls – Check Writing

July 29, 2012
Georgene

Is your business at risk for theft? What are your internal controls?

How do you handle check writing for your company?  Does one person receive, post, then write the check to pay the bill?  What are your checks and balances to prevent reduce the risk of theft and/or error in your company when it comes to paying your bills?  Do you have adequate internal controls in place that make sense for your business?  Best practice for reducing risk in this situation is as follows:

  1. The person who enters the vendor bills into the system should not be the same person who creates the checks.
  2. The person who creates the checks shouldn’t be the same person who signs the checks.
  3. A third person should be in charge of approving the vendor bills before they can be entered into the accounting software.

If this is too many people for your business, at the very least ensure that the person entering the data and creating the check is not the same person who signs the check.  If you are the signer, make sure to review the invoice carefully (make sure it is really for your business – shipping addresses match, etc.), ensure that the amount on the check matches the amount on the invoice.  It is easy to overlook those details – and many victims of fraud had the information right in front of them, they just didn’t look at carefully enough.  Review your financial reports carefully for transactions that may seem off from what you expected.  Quick Books has a nifty feature called an audit trail than can also be analyzed for potential concerns.  Lastly, you must ensure your books are reconciled with your bank statements every month.  This is a very important control that I find is often left undone by business owners. It never hurts to take a quick look at the internal controls for writing checks and make a change or two if needed to reduce your risk of theft or errors.

No comments

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>