Raising your game 7: Robust internal control

By charity finance expert Paul Leigh

Paul Leigh
Paul Leigh

Internal controls are the bedrock of any finance function. Without them, you are building a house on sand. They safeguard assets and provide assurance on the accuracy of the numbers.

Such controls are often misunderstood as a sign that management don't trust staff, but their purpose is quite the opposite: they protect staff by trapping errors.

Segregation of duties is one of the key internal controls, but it is something that brings challenges in smaller organisations. Don't underestimate the value of "looking in the rear-view mirror" to analyse the data and identify any unusual trends or unexpected transactions.

Internal and external audits will provide an independent review of controls and can be of real help.

A few tips: If an error does get through, review the effectiveness of your controls. Best practice suggests the cost of the control ought not to exceed the value of the risk, but be intolerant of risk on cash.

Topics:
Finance Advice

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