Many business owners and investors do sign all of their checks. This is a great way to reduce the opportunity for embezzlement, but there are still some steps that often get missed when the owner is signing the checks. http://WWW.ProVisionWealth.com
Here are 3 questions to help you evaluate your internal control system.
Question #1: Who opens the bank statement? The monthly bank statement for your business and investments is a great tool to reduce the opportunity for embezzlement.
Think about this scenario:
Your bookkeeper receives the bank statement, opens it and does the reconciliation on time, each and every month. While it is fantastic that the bank account is reconciled timely each month, think about the opportunity for embezzlement in this scenario.
If you never see the bank statement, you never have the chance to see things that may strike you as odd. Maybe the bank balance is much lower than you expect, or maybe you see cancelled checks that you didn't authorize, or maybe the big A/R collection that came in that month isn't listed in the deposits made.
While you may not catch all errors by receiving and opening your bank statements, you do reduce the ability for someone else to hide these types of errors - whether the errors are intentional or not.
Question #2: Do you sign all your checks personally? Many business owners and investors do sign all of their checks. This is a great way to reduce the opportunity for embezzlement, but there are still some steps that often get missed when the owner is signing the checks.
First, when signing checks, insist on seeing the back up, such as the invoice being paid. This little step has a huge impact because with no back up, it is possible for the person preparing the checks to write checks for the wrong amount, and to write checks to a fictitious company (that they own) that sounds like a company you may use.
Second, even if you sign the checks, you'll still want to receive and open your bank statement to make sure all of the cancelled checks have your signature and are made payable to companies you approved.
Question #3: Do your employees take regular vacations? This may seem like an odd question, but it can be an indicator of fraudulent activity. We may think that the employee who loves their job so much and never wants to take a vacation is an ideal employee. While that may be the case, it may also be the case that the employee doesn't want to take a vacation and have someone else uncover what they are doing.
How Do Your Internal Controls Rate? If you were surprised by some of the questions and answers here, there is good news. It is possible for small businesses and investors, even those with just 1 employee, to create an effective system of internal controls without spending a fortune on it (even though it may protect a fortune).
Often times, just tweaking a few tasks can greatly improve an internal control system.
- Ask / Related Q&A
Your Hard Money Lender, Your ‘Deal Savior’
By: Carrie Dawson | 09/11/2009Just when you thought you had no one else to turn to, you find a hard money lender and you close a deal. Indeed, hard money lenders are saviors, especially for those in the real estate investing business. Traditional lenders, of course, have always been helpful. It’s just that when it comes to flipping houses and other forms of real estate investing, hard money lenders are better.
Customer Service Call Centers - Top 5 Myths That Must Die
By: Daljeet S. Sidhu | 09/11/2009As call centers have mushroomed and businesses across the globe have become dependent on them, a number of myths about call centers have gained currency and are refusing to die. In order to properly appreciate the operation and utilization of call centers it is important that these myths are dispelled....
Why Hard Money Is The Ideal Financing For Real Estate
By: Carrie Dawson | 09/11/2009Hard money interest rates are twice as high compared to traditional loans but it is still considered as the best form of financing when it comes to real estate investing. Hard money financing has many advantages over traditional loans despite the higher interest rate and this is why it is in demand among house flippers.
Understanding Hard Money Loans
By: Carrie Dawson | 09/11/2009Hard money is a staple term in the world of real estate investing. It is also a word that beginners in the business find hard to understand and a form of loan that keeps rehabbers flipping more and more houses without spending a dollar.
The High Interest Rate Myth Of Hard Money
By: Carrie Dawson | 09/11/2009True: Hard money loans have higher interest rates than traditional loans. False: It is not advisable to use hard money loans when you’re in real estate investing.
Search Criminal Conviction Records To Lookup Criminal Charges of Someone
By: James Nash | 09/11/2009If you want to search criminal arrest records online for free then you have to be weary of these free criminal records as they are not accurate. Hence it is better to pay some fee and get the right criminal record information about any person if any.
Photography Studio Business Plan: Making the Most of Your Space
By: Eric Powers | 09/11/2009When opening a photography studio, you must make a significant initial, and then monthly, investment in your space. To justify these expenses to investors in your business plan, show how you will utilize the space to its fullest. It represents one of your major assets, and renting such a studio while explaining in your plan that your shoots will primarily be out on location shows poor planning on your part to funders.
Good Business Plans: How to Persuade Investors
By: Eric Powers | 09/11/2009An investor will naturally need to be convinced to give money to any business. Of the dozens of deals that come across their desk, they can choose only a few to fund, if that. This makes investors skeptical of plans that promise easy money and exorbitant returns.
Year-End Checklist for Business Owners and Investors
By: Tom Wheelwright | 02/11/2009 | FinanceBookkeeping is one of the keys to bringing a tax strategy full circle. It's one thing to know what's deductible and how to maximize your deductions, but unless that gets reflected in your bookkeeping, it's as if the tax planning never happened at all.
Tax-Free Rental Income
By: Tom Wheelwright | 30/10/2009 | FinanceOf course, there are specific rules behind this permanent tax saving strategy. I find that after I go through the rules with my clients, we usually find a way to use this strategy - legally - and it creates another stream of permanent tax savings.
Year-End Checklist for Rental Real Estate
By: Tom Wheelwright | 30/10/2009 | FinanceReal estate is also one of the most complex areas of the tax law. This makes it easy to overlook important steps, which can lead to missing out on tremendous tax savings.
2 More Reasons for Estate Planning
By: Tom Wheelwright | 04/10/2009 | FinanceYou've probably heard a lot about the probate process, but have you ever heard anything good about it? Most probate stories are nightmare stories. Probate can be expensive, it's a public process and it can be contested.
3 Ways Partnerships Give Your Tax Strategy Maximum Flexibility
By: Tom Wheelwright | 17/09/2009 | BusinessWhen the business starts, the owners have a profit sharing structure in mind, let's say it's 50/50. Then, a few years down the road, the owners have a need to change their profit sharing structure - maybe their roles have changed or perhaps one wants to work less.
An Opportunity to Convert to a Roth IRA in 2010
By: Tom Wheelwright | 13/09/2009 | Finance2009 is the Time to Start Your Planning If you plan on converting, then now is the time to start planning because your 2009 tax planning may look a little different. For example, you may want to defer deductions until 2010 and accelerate income into 2009 to avoid being pushed into higher brackets in 2010, 2011 or 2012 from large conversion income.
3 Ideas for Business Financing in a Tough Market
By: Tom Wheelwright | 31/08/2009 | BusinessThe form of leverage most people are familiar with is a loan, which is a way to leverage your assets. Leverage in this case may be a mortgage on a piece of property or a line of credit in your business.
The Benefits of Setting Financial Goals
By: Tom Wheelwright | 14/08/2009 | FinanceIf you don't know how much you are saving or when you will be able to retire, it's time to look at the benefits of setting financial goals. It's important to look at what your future plans are, how much you can contribute to them, and how you plan to manage and grow your wealth.