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Financial Controls


An internal control checklist is intended to give an organization a tool for evaluating the state of its system of internal controls. By periodically comparing the checklist to actual systems, one can spot control breakdowns that should be remedied. When followed regularly, a checklist has the following benefits

  • There are fewer audit comments about internal control weaknesses
  • Management can gain assurance that reported financial results are accurate
  • There is a reduced risk of asset losses due to fraud
  • There is less chance that the organization is not complying with any applicable regulatory requirements

Internal controls are a system of policies, procedures, reviews, segregation of duties, and other activities that are used to minimize the risk of asset loss, produce accurate financial statements, and conduct operations in an efficient and orderly manner.

When going through an internal control checklist, the intent is to spot any controls that are missing or weak. Such a finding does not automatically indicate the presence of a control problem that requires remediation. If there are offsetting controls elsewhere in the system, a weak control could be considered acceptable. The internal control checklist can be massive, and is tailored to the needs of the individual business. Here is a selection of the controls that might be found in a typical business:

  • General Accounting Controls
  • Cash Funds Controls
  • Cash Receipts Controls
  • Cash Disbursement Controls
  • Investments Controls
  • Accounts Receivable and Sales Controls
  • Notes Receivable Controls
  • Inventory and Cost of Sales Controls
  • Prepaid Expenses and Deferred Charges
  • Intangibles Controls
  • Fixed Assets Controls
  • Accounts Payable Controls
  • Accrued Liabilities and Other Expenses Controls
  • Payroll Controls
  • Long-Term Liabilities Controls
  • Shareholder's Equity Controls
Typical Characteristics of Small to Medium Enterprises (SMEs)

Typical Control Deficiencies

  • Lack of formal documentation for purchase of inventory and assets
  • Inadequate documents in support of transactions entered
  • Inadequate records relating to receipt/production, consumption/dispatch and stock of inventory/finished goods
  • Non-Professional staff not understanding accounting issues
  • No formal system of financial reporting at periodic intervals
  • Absence of control over cut-off operations and closing journal entries
Scope of Services

  • Design Assessment
  • Gap Remediation through Control Structures, Policies and Standard Operating Procedures (SOP's)
  • Operating Effectiveness
  • Assessment & Reporting
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