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As a business owner, you wear many hats — from generating sales and overseeing operations to initiating hiring and formulating strategy. Nevertheless, the one area that often doesn’t get the attention it deserves is internal controls. While controls may sound like something only large corporations worry about, internal control is essential for businesses of all sizes. Effective internal controls can protect a business, increase efficiency, and give owners peace of mind. What are Internal Controls Internal controls are the policies, procedures, and systems you put in place to protect your business. They consist of preventive. detective and corrective measures to

Accounts payable (AP) is a critical area within a company’s financial operations and is commonly vulnerable to various risk factors if not properly managed. This mismanagement can lead to compromised financial integrity and stability as well as strained vendor relationships. Some of the most common vulnerabilities along with recommended strategies for their monitoring and prevention are described below. Vendor fraud: AP processes are particularly susceptible to vendor-related fraud, including the use of fictitious vendors, counterfeit invoices, and altered payment details, all of which can lead to serious financial consequences. To minimize these risks, organizations should maintain a secure and regularly

Taking your business from a Start-up to a Scale-up is an incredible milestone. As you focus on building your brand and raising capital to grow, it is vital to simultaneously focus on financial reporting. Having a proper financial reporting structure not only demonstrates success, but it also instills investor confidence in the business, and its management. Start-up vs. Scale-up A Start-up company is a business in the early stages of operations. At this point, a company has established minimal structure, and likely lacks policies and procedures, since efforts are primarily focused on expansion and growth. On the other hand, a

Payroll internal controls are critical for every organization to prevent fraud, avoid clerical errors and protect confidential employee data. Payroll fraud can include such acts as an employee falsifying time records and the payroll administrator paying wages or a salary to a fictitious employee. These acts generally occur due to a lack of internal controls over payroll. Here are key controls to consider: Access controls: Restrict access to the payroll system and employee files to authorized employees only. Segregation of duties: The preparation, approval and processing of payroll should be segregated amongst various employees. Depending on the size of an

Internal controls over cash are meant to protect and safeguard cash assets. Implementing such controls empowers organizations to limit fraud. How a business approaches cash handling controls depends on the nature of the entity. The cash system in a retail setting will differ from that of a professional services firm. However, in every organization the cash system generally includes cash disbursements (payments), cash collections (receipts) and petty cash. The following are some common internal controls businesses should have in place to protect themselves: Safe storage of petty cash and cheques – Organizations are strongly encouraged to maintain a safe on

While fraudulent behavior can occur at all levels of the organization, more than half of occupational frauds occur in (1) operations, (2) accounting, (3) executive/upper management, and (4) sales.¹

What are Internal Controls? The preparation of reliable financial information is a key responsibility held by every company’s management and thus the accuracy of that information is imperative.