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What Keeps You Up at Night?

Normally what keeps me up at night might be something at the office or perhaps some drama with one of my teenagers at home. Recently, it was overconsumption of some extremely tasty Thai food, should have stayed with a spice level of #4! While dealing with the ensuing heartburn, it got me to thinking about my clients and what facets of their business that keep them up at night?

For one of my newest clients it was the various emotions of dealing with someone stealing from his company. He had implicit trust in this long time employee/friend, but sometimes things happen in people’s lives and the urge to go down a wrong path is too tempting. Fortunately for this business owner he uncovered the fraud early, before this employee/friend got too far down that wrong path, so that the damages were limited. This however did not stop him for going through a range of emotions which included feeling betrayed/violated, followed by anger, and then a sense of embarrassment (how did I let this happen?). Plenty to keep a person up at night.

To provide a business owner with peace of mind, allowing for a good night of sleep, we ask the following questions surrounding the current level of internal controls over cash disbursements in your business.

  • Are all disbursements, except those from petty cash, made by pre-numbered checks?
  • Are void checks preserved and filed after appropriate mutilation?
  • Is there a written prohibition again issuing checks payable to “cash”?
  • Is there a written prohibition against signing checks in advance?
  • Is a cash disbursement voucher prepared for each invoice or request for reimbursement that details the description of expense account to be charged and contains authorization signature and accompanying receipts and/or vendor invoices?
  • Are all expenses approved in advance by authorized persons?
  • Are signed checks mailed promptly and by someone other than the person preparing the checks?
  • Do the check signors review supporting documentation or expenses and approvals at the time of signing checks?
  • Are paid invoices marked paid or attached to a copy of the check prior to filing?
  • Are requests for reimbursement checked for mathematical accuracy and reasonableness before approval?
  • Is check-signing authority vested in persons at appropriately high levels in the organization who do not have any accounting responsibility?
  • Are bank statements and cancelled checks received and reviewed by a person independent of the accounting functions?
  • Are unpaid invoices maintained in an unpaid invoice file?
  • Is a list of unpaid invoices regularly prepared, reviewed, and compared to those invoices in the unpaid invoice file?
  • Are advance payments to vendors and/or employees recorded as receivables and controlled in a manner which assures that they will be offset against invoices or expense vouchers?
  • Are employees required to submit expense reports for all travel related expenses on a timely basis?

 

Address the above items, sleep tight and look for my next blog concerning controls over petty cash.

 

PKC Kuebler, APC is a full-service public accounting firm registered and licensed to practice as an accountancy corporation by the California Board of Accountancy . The information provided is intended for general tax and accounting needs. Articles are written for informational purposes only and should not be seen as any kind of advice. Content is accurate and true to the best of our knowledge, however, there may be omissions, errors or mistakes and it is advised you contact your CPA before taking any financial action. The opinions expressed in our articles do not reflect the opinions of any organizations in which we are affiliated with.

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PKC | Kuebler, APC

27244 Via Industria
Temecula, CA 92590
Main: 951.676.6555
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