10 Ways to Improve Internal Controls and Prevent Fraud
in your Small to Medium Sized Business
There aren’t too many “universal truths” in this world – but - I’ll go out on a limb and say this - everyone hates getting ripped off or taken advantage of. As the CEO, President or owner of a small to medium-sized business you are more vulnerable to being taken advantage of by unscrupulous employees and vendors. There are several reasons for this, including; It is harder for smaller companies to have excellent internal controls You may not want to spend the time/money necessary to maintain good controls You don’t’ have the staff or the history to build a good internal control system With the slowing economy, people are desperate – and desperate people do desperate things – theft and embezzlement are on the rise
Here is my “top 10 list” of ways you can improve your internal controls and hopefully help prevent fraud before it happens. Some of these make perfect sense and fall in the “duhh” category (to quote one of my favorite teenagers!) while others may be a little more subtle. 1. Review and approve monthly bank reconciliations 2. Review Payroll registers 3. Review and approve ‘vendor master file’ changes 4. Have a policy on personal use of company property 5. Monitor company credit cards 6. Have a formal purchasing policy 7. Ensure transparency and oversight 8. Review your monthly financial statements in a timely fashion 9. Have a policy on conflicts of interest and enforce it 10. Use a lockbox for inbound checks
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If you have comments or questions about this list – or any other matter concerning internal controls – please contact me. I’d be happy to discuss how Fuse LLC can help you address any concerns you might have. Contact me at email@example.com or 864-415-1601 for more information.
John R. Heaps Owner, Fuse LLC “Igniting Your Business” Fractional and Interim CFO Services for growth and middle market...