5 Internal Controls Every Business Should Have in Place by Now
If your business lacks these, it’s not a question of if fraud will happen but when.
Internal controls are the foundation of a business’s financial security. Without them, you’re essentially leaving your business open to fraud and operational inefficiencies. While you may be doing your best to manage risks, without these essential controls, you’re only one slip-up away from a financial disaster.
One of the first and most critical controls is segregation of duties. This means that no one person should be responsible for both initiating and approving transactions. When one individual handles everything, it opens the door for fraudulent activities to go unnoticed. Segregation of duties ensures that the person who handles cash or approves payments is not the same person who records the transactions. This simple but effective control drastically reduces the risk of fraud and errors.
Another essential control is dual approvals. Requiring two levels of approval for financial transactions ensures that no action is taken without verification. This system adds an extra layer of oversight and minimizes the chances of fraudulent transactions slipping through unnoticed.
Petty cash tracking is often overlooked, but it’s a control that can save your business from financial losses. Ensuring that all petty cash expenditures are logged and tracked carefully ensures that small, frequent transactions don’t add up to significant losses over time.
Access restrictions are also key to maintaining control over sensitive financial data. By limiting access to critical financial systems or information to only those who absolutely need it, you reduce the risk of unauthorized manipulation. This ensures that your financial operations remain secure and that any changes or transactions are well-documented.
Finally, regular audits are a must. Even if you trust your staff and systems, an independent audit brings a fresh set of eyes to ensure everything is in order. Audits help spot discrepancies and identify potential risks before they spiral into bigger problems.
At Networth Adjusters, we specialize in designing and implementing internal controls tailored to your business. These controls aren’t just policies; they’re a necessary part of safeguarding your operations and building a strong, fraud-resistant business.
Your business deserves the best protection. Let’s ensure you have the right internal controls in place to avoid costly mistakes and protect your future.
