Diligent CFOs and finance directors rely on strong internal controls to ensure the accuracy and integrity of their organization’s data. Establishing systems and processes for handling and managing financial transactions can mitigate risk, enable accurate reporting, increase efficiency, and help reach organizational goals.

Following is a list of some of the most common protocols and procedures that can protect an organization and assure compliance.

Revenue Controls

Completeness Assertion: This procedure defines the process for recording revenue to ensure that records and reports are accurate.

Cutoff Assertion: Management should review recorded transactions to make sure they are recorded in the correct period.

Occurrence Assertion: Management should also confirm that every revenue transaction that has been recorded actually occurred.

Accuracy/Valuation Assertions: To avoid overbilling or underbilling, established procedures check to make sure that the correct amount of revenue was recorded.

Rights and Obligations Assertion: Procedures can prevent sales in excess of credit limits or to customers who are on a credit hold.

Accuracy Assertion: Internal controls confirm that all checks received are accurately applied to A/R and posted to the correct customer accounts and invoices.

Existence Assertion: It is important to have procedures to verify that fictitious invoices haven’t been created, and that all credits issued have been authorized.

Cash Receipts Controls

Completeness and Accuracy/Classification Assertion: Organizations should implement controls to ensure that all cash and checks received have been deposited into the bank and recorded in the accounting software, and that none have been skimmed for personal gain.

Payroll Controls

Accuracy Assertion: Payroll control procedures confirm that only current and active employees get paid, and that these employees are paid the correct amounts.

Existence/Accuracy/Cutoff Assertions: Controls also make sure that accrued payroll and bonuses have been correctly recorded at the end of a given period.

Purchasing Controls

Occurrence Assertion: Management should implement procedures that confirm all purchases have been authorized and all products and/or services have been delivered.

Accuracy/Classification Assertions: Controls are necessary to verify that all vendor invoices are entered accurately in the accounting system.

Accuracy Assertion: Internal controls can also avoid duplicate vendor invoices from being entered into an accounting system.

Accuracy/Rights and Obligations Assertions: Management can create controls to make sure that only valid vendors are paid.

Accuracy Assertion: Implement a procedure that confirms that proper amounts are paid to each vendor.

Existence/Occurrence Assertions: To avoid confusion and problems, create procedures to prevent unauthorized disbursements.

Month/Period-End Close Controls

Accuracy and Existence/Occurrence Assertions: Monitoring accounting system journal entries prevents unauthorized entries or detects them if they are posted.

That’s a long list and a lot of processes. It may seem cumbersome, or overwhelming, or confusing. But that’s what the professionals at Dembo Jones do – help our clients understand and get a handle on the systems, procedures and steps that will work in their unique business environment.

If you’re not sure if your controls are adequate, give us a call to discuss how to improve your organization’s data accuracy and privacy.