easy financial controls - oweesta...powerpoint presentation author: florence ludka created date:...
TRANSCRIPT
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Easy Financial Controls
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White Buffalo
CDC
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Pacific Financial Services
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Dancing Crane CDFI
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Internal Controls
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What is Internal Control?
Internal control is the process by which management structures an organization.
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Internal controls function to:
•minimize risks and protect assets
•ensure accuracy of records
•promote operational efficiency
•encourage adherence to policies, rules, regulations, and laws
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Seven Examples of Internal Controls
• separation of duties
• access controls
• physical audits
• standardized documentation
• trial balances
• periodic reconciliations
• approval authority
• cash control
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Segregation of Duties
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Examples of Segregation
•Vendor Maintenance & Posting Invoices
•Purchase Orders & Approvals
•Payments & Bank Reconciliation
•Paychecks & Bank Reconciliation
• Journal Entry & Approvals
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More Examples of Segregation
• Custody of Cash & Account Receivable Reconciliation
• Hire & Set Compensation
• Expenses & Expense Approvals
• Asset Custody & Asset Inventory
• Sales & Approvals
• Customer Maintenance & Credit Notes
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Board Oversight
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Board Oversight Options
• A strong, involved treasurer
• A quality finance committee
• Recruiting a mix of board members, but at least a few strong enough with financials
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Board Financial Responsibilities
•Understand and review the financial statements
•Review and approve the annual budget
•Review auditor qualifications and audit, annually
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Signs The Org is in Trouble
1. Not sharing financial statements with board at least quarterly; not able to produce easily
2. More than two years with a net loss, especially large unrestricted net asset losses
3. Dwindling cash
4. Dwindling loan capital
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More Signs The Org is in Trouble
5. A lot of loans to family or board members
6. Irregular board meetings
7. Board members leaving/not full board
8. Any “secretive” staff or board members
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Audit Control Procedure
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Audit Tests
• inquiry
• observation
• examination or inspection of evidence
• re-performance
• computer assisted audit technique (CAAT)
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Policies
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Must Have Policies
• Employee Handbook
• Financial Management Policy
• Procurement Policy
• Loan Policy
• Travel Policy
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Conflict of Interest Policies
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Conflicts of Interest- Disclose
•Direct financial relationships with the organization
•Familial relationships with staff members
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Whistleblower Policies
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Whistleblower Policies
• Federal law prohibits retaliation against employees who report fraud
• Everyone in the organization has the responsibility to report violations of law, regulations, or ethics
• Designate a point person or committee to receive and investigate possible violations
• Violations don’t need to be true to receive protection, but they must be made in good faith
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Protecting Whistleblowers
Confidentiality• Identity is kept as secret as
possible
• May need to be disclosed to conduct investigation or allow for legal defense
No Retaliation• Termination
• Cut in pay or hours
• Threats
• Poorer work assignments
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Board Oversight
Audit
Whistleblower Policies
Conflict of Interest Policies
Separation of Duties
Strong Policies and Enforcement