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SMB Internal Controls

A lot of clients only have one person that handles all of their accounting functions.  Poor internal controls can permit intentional and accidental improprieties to go unnoticed.  There are some basic actions an owner can take to protect themselves:

  • Review monthly bank and credit card statements: Look at the cancelled checks and EFT withdrawals and make sure you can identify them.  Be aware that a bookkeeper could have the same credit card vendor or insurance company and be paying their own bills.  Periodic questions to your bookkeeper will at least put them on notice that you are paying attention.
  • Sign your own checks and minimize EFTs: Signing your own checks gives you a chance to review each payment and ask questions.  When you review your cancelled checks, you can easily look for your signature.
  • Review payroll reports: Make sure your bookkeeper has a secure place to store your payroll records.  Looking at the weekly/quarterly reports and pay stubs can identify if an employee is being paid the correct hours and the correct rate.  You can also monitor overtime in a timely fashion.
  • Engage a CPA more than once a year: Having a CPA perform monthly bank reconciliations or review quarterly profit and loss reports can assist in the separation of duties.  In addition, we can ensure tax compliance (sales tax, payroll taxes, 1099s) and be proactive about tax planning.