President
Inform the President of any new internal control requirements if the company decides to go public.
Instituting a system of internal checks and balances would be foremost in my recommendations to the company president since most internal control systems provide for independent internal verification; this principle involves the review of data prepared by employees. To obtain maximum benefit from independent internal verification:
Companies should verify records periodically or on a surprise basis.
An employee who is independent of the personnel responsible for the information should make the verification.
The company should also look at incorporating a Voucher Control System. Most medium and large companies use vouchers as part of their internal control over cash disbursements. A voucher system is a network of approvals by authorized individuals, acting independently, to ensure that all disbursements by check are proper.
When looking to hire new employees, it is vital that the company utilize the extensive resources on the web in providing for complete background investigations. A lot of wasted time and energy could be recouped using effective human resource controls. Effective web access controls could likewise prevent embarrassing behavior and lost company time on the part of current employees (ie downloading porn,...
"Internal control over a petty cash fund is strengthened by: (1) having a supervisor make surprise counts of the fund to confirm whether the paid vouchers and fund cash equal the imprest amount, and (2) canceling or mutilating the paid vouchers so they cannot be resubmitted for reimbursement."
Advise the President of what the company is doing right (they are doing some things well) and also recommend to the President whether or not they should buy the indelible ink machine. When you advise the President, please be sure to reference the applicable internal control principle that applies.
Although it might at first glance appear that having one person perform as both Treasurer and Controller, given that it streamlines many of the companies processes, is a plus, this is also a double edged sword with potentially dire consequences (see below). It is likewise commendable that checks be locked in the accountant's safe but, as we'll see, that area of responsibility could be better allocated.
On the other hand, kudos to the fact that he is now using pre-numbered invoices since, under the documentation procedures principle, "all documents should be accounted for; prenumbering helps to prevent a transaction from being recorded more than once,…
