April 2010 - Sharron O'Donnell, CPA - Downsizing: Do We Have To Sacrifice Internal Controls?

Speaker Highlights

April 28, 2010

 

Downsizing: Do we have to sacrifice internal control?

Presented by

Sharron O’Donnell, CPA

Economic Climate Change

o Adapting to a new business environment

o Need to adapt controls to fit the new environment

o Huge opportunity to reassess what your are doing

      - Are we on track?

      - Is this still useful?

      - Are we doing it efficiently?

Some things don’t change

o   Five components of internal control

-          Tone at the top

-          Risk assessment

-          Control activities

-          Information and communication

-          Monitoring

o   Components actually become more important

-          Tone at top: If management does not take controls seriously then no one else will

-          Risk assessment: Biggest risk is in disbursements. Look at how you spend money.

            - Fraud triangle: Opportunity, Rationalization, and Pressure

-          Control Activities: Written policies and procedures, segregation of duties, etc

            - Control over assets should be separate from record keeping

-          Information & Communication: Reduced staff could mean that someone with less expertise is the user and how can the information be more helpful to the less experienced user.

-          Monitoring: how to ensure that we identified and adapted changes in the risks and changes in the control activity

o   Disbursements

-          In a perfect world

            - Program staff makes purchase

            - Invoice is approved by program manager

            - Accounts payable enters into the system

            - Payables are approved for payment by someone else

- Checks are printed and given to authorized signer with supporting documents that have been marked paid

            - Signed checks are returned to someone outside the accounting function to be mailed

-          In real world, the person that approves and signs might be the same person

-          Everyone has access to accounting records

-          Worst case is one person does it all and they are not the owner

o   Key Control Activities

-          Clearly define who is responsible for what in written policy and procedures

-          Physical controls

-          Timely reconciliation of bank statements

 

For more information Contact:

Sharron O’Donnell, CPA

Bader Martin, PS

1000 Second Ave

Seattle, WA 98104

Phone: 206-621-1900

E-Mail: sodonnell@badermartin.com