Most businesses have financial records which accurately reflect their activity, but no organization is safe from accidental or intentional mishandling of funds. One of the best ways to minimize the risk of a financial mishap is to perform a review of your business' internal accounting procedures and controls.

Although this cannot replace an internal audit performed by Logan Katz LLP Chartered Accountants, a review of certain accounting and financial areas will allow you to see how your business measures up, and may show you whether your business has weaknesses and is in need of professional help to strengthen its internal accounting controls. Here are some questions you should ask about your business' financial activity:

Accounting and Bookkeeping

Records

• Do you keep standard accounting records?
•  Are they properly organized and are they balanced regularly?

Cheques

• Do you use prenumbered cheques?
• Do you have a set policy for completing and signing cheques?
• Is the person completing the cheques different from the person signing the cheques?

Bank reconciliations  

• Are bank reconciliations performed monthly?
•  Who performs this task?
• Does anyone review the reconciliation?

Petty cash

• Is there a petty cash fund?
• Is there a maximum amount which can be withdrawn?
• Who has access to the fund?  
• Who supervises it?

Mail and cash receipts    

• Is the person opening the mail different from the person who records the mail receipts?  

Bank deposits

• Are different persons responsible for preparing the bank deposits and making the deposits?

Accounts Receivable and Billing

Receipts

• Are the receipts prenumbered?
•  Are cash receipts balanced daily?
• Is there a procedure to ensure that the daily deposit total equals the amount collected in a day?

Billing forms

• Are all bills entered into a billing system?

Tracking

• Is there a way to ensure that all products, services, or consultations are tracked and billed?

Electronic Transfer of Information

• Do you transfer information or make payments electronically?
•  Is there a procedure in place to check whether the electronic transmissions were received?

Verification

•  Is there a method of verifying the accuracy and timeliness of payments received?

Entry Adjustments

• Is there a policy on how to and who can adjust entries and perform write-offs?
• Is the policy followed?

Collection

Aging

• Is an accounts receivable aging report printed and reviewed in detail? This will help an office assess how well its collection efforts are doing.  

Statements

• Are monthly statements on account balances sent to all customers who have balances due?

Reminders

• Do your statements have dunning messages?
• A dunning message is a friendly reminder at the bottom that the account is overdue by a certain amount of days.

 An internal review is just the beginning, but it can help assure you that all your business is being accounted for, or it may signal to you that your business has certain financial weaknesses and may need some fine tuning. After this stage, you may wish a more detailed audit performed, or you may wish to discuss certain follow-up ideas, and Logan Katz LLP would be happy to assist you.

The above provides general information only. It should not be regarded or relied upon as accounting or taxation advice or opinions. Logan Katz LLP Chartered Accountants would be pleased to provide more information or specific advice on matters of interest to you.

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