Incorporating simple accounting controls in your business will improve the quality of your accounting information, improve reporting, and help protect your businesses assets. These are some of the controls that you can easily use in your business:
- Restrictively endorse all checks as soon as they are pulled from their envelope, by the person opening the mail. You can make the endorsement manually or use a stamp (preferred).
- Keep your check stock locked up.
- Minimize the number of people that have signature authority on your checking accounts.
- Regularly perform physical stock counts and thoroughly analyze variances. Look for abnormal shrinkage and indications of poor record keeping.
- Review outstanding receivables on a regular basis and begin collection processes on past due amounts as soon as they become past due.
- Establish a credit policy and stick to it.
- Make sure that all business transactions are reviewed and posted on a timely basis.
- Record commitments, such as purchase orders, as soon as the commitments are made to your vendors.
- Review outstanding commitments and expedite shipments when necessary.
- Incorporate controls to mitigate duplicate payments.
- Use payment schedules to account for and control recurring payments.
- Exercise review and control over adding new vendors to your vendor master file.
- Maintain detailed records to account for the purchase, whereabouts, and disposal of fixed assets.
- Establish and maintain an employee policy manual.
- Regularly audit payroll records for ghost employees. This should be performed by someone outside of the normal payroll process.
- Limit access to your accounting records and clearly define access for transaction processing.
These are fairly normal control procedures used by small and medium sized businesses. None of them are too onerous to incorporate into your business. Many of these controls are easily facilitated by using a hosted ERP system like myGPcloud.