I’ve worked with many companies from small to large (from the World Bank to the local Church) and one area of accounting that all businesses (particularly the small business) need to be attentive is internal controls. I’m focusing here on small businesses because most larger companies undergo annual audits, in which, internal controls are reviewed/assessed and any shortcomings found are formally presented to management.
First off, If you are a small business owner and the whole concept of internal control is foreign to you, I highly suggest you go to our main site (http://accountantdirectory.com) and find a local accountant who can educate you and/or assist you in establishing proper internal control for your business.
The focus of this topical post is internal controls surrounding cash. As you may or may not have heard, the old saying is true… ‘Cash is King’. As such there needs to be extra attention to ensuring that your cash is secure. In a one man operation this is done easily, but when additional employees are hired things can a get a bit tricky. The key behind all internal controls is segregation of duties. I think this point can be best explained via a few examples (all small business examples):
I hope these examples help you grasp the concept of internal control.
Stay tuned as I continue this discussion of internal control in forthcoming blog posts.
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