All too often, you hear horrible stories about bookkeepers defrauding businesses – recently, one stealing more than $300,000 from a local business in Western Australia, and last year, a worker stealing almost $1m from a popular Hastings Street restaurant over a number of years. Could you imagine how you would feel if this happened to you?
It is very easy to allow people you trust to take control of the finances and administration of your business, and it is often the first thing that most small business owners reach out for help with. But unfortunately, defrauding small businesses is easy to do unless there are adequate internal controls in place.
You can easily add a layer of protection to your business by having simple internal controls that will reduce your risk. Here are 5 simple controls you can implement quickly and easily to help protect your business:
- Dual authority for all fund transfers/payments – use different people to prepare payments and authorise payments such as bills, payroll, customer refunds, bank reconciliations, inventory adjustments, etc.
- Maintain a master list of authorised vendors and have a dual verification process for the addition of new vendors to the master vendor list.
- Have processes and procedures to ensure tasks are being completed in line with business practices, including rotating tasks and using annual leave time for different people to undertake and review tasks.
- Keep track and enforce approval requirements for any financial or asset adjustments being processed.
- Have financial statements reviewed by a third party to provide feedback/monitoring of relevant business metrics to easily spot discrepancies.
By understanding and implementing good internal controls, it helps to remove opportunity and motivation for fraud and theft; however, you will also benefit from being able to manage resources and make sure operations are efficient and effective.
If you haven’t recently reviewed your internal controls, why not set some time aside to safeguard your assets and ensure your business is protected. I have extensive experience in working with businesses to review gaps and offer advice on ways to improve internal financial controls.