Are Small Medium Business Too Small For Effective Internal Controls?
The lament of many small business owners/managers is, “We’re too small for internal controls”. This complaint isn’t true! Even a relatively small business can enforce certain internal controls that are very effective. Among these are the following: • The owner/manager should sign all checks, including payroll checks. This practice forces the owner/manager to keep a close watch on the expenditures of the business. Under no conditions should an accountant, a bookkeeper, or the Controller of the business be given check-signing authority. This person can easily conceal fraud if he or she has check-writing authority. • In high-risk areas (generally cash receipts and disbursements, receivables, and inventory), require that employees working in these operating areas take vacations. Furthermore, make sure that another employee carries out their duties while there’re on vacation. By doing the same job, the fill-in employee serves as a check on whether the regular employee is doing things correc
