| What's Up Doc? | |
| Volume 2, Issue 3/Newsletter courtesy of Electronic Document Service, Inc. | September 2000 |
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Are You Risking Business Failure?
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Receivables. One frequent area for abuse is in the handling of receivables. If one person is in charge of receiving customer payments and depositing them in the bank, that same person should not be allowed to record the payments in the accounts receivable records. A different person should reconcile the bank statement to make sure everything is in check. A "lock-box" arrangement with a local bank is an excellent control, and my firm recommends this whenever possible. This process can assist with timing issues related to cash flow since the money is immediately deposited in the business bank account. Additionally, it lessens the chance for misuse of company funds. What About Purchasing? When the person who makes orders for the company is the same person who verifies the purchases when they arrive, there is opportunity for abuse. In this situation, the purchaser can easily order items for "other than company" use without anyone else realizing it until it's too late. Protect your Company Assets. An important goal of internal accounting control is the protection of assets. This could include security devices such as fences, alarms, and cameras. It also includes control over access to accounting records and unused preprinted forms and documents. It is extremely important to keep accounting records in a safe and secure place to insure that the information will not be tampered with. The Small Business Dilemma. Unlike large businesses, small businesses have trouble separating the duties. This happens for two reasons: (1) owner / management dominance and (2) limited employees making it difficult to separate positions and responsibilities. As a result, many control procedures may be performed by the owner/manager or one employee. It is not practical for small businesses to hire one person to deposit checks, one person to record the checks in accounts receivable, and one person to purchase the assets just to strengthen controls. The danger arises when the business grows to the point where the owner hires his/her first employee. There can be a temptation to offload as many administrative duties as possible. When that first employee is hired, an eye must be kept on internal control and the proper precedents in this area must be set! Start With the Company Policy. Every business needs to tailor the controls to their needs and assess the risk associated with not following a textbook internal control structure. Start by insuring there is a company policy in place that states "internal controls are to be established to protect company assets". Be sure all staff members understand this; they may even be the ones suggesting the best controls. Michael Clark is a partner with Cassady Schiller & Associates Inc. located in Blue Ash. |
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1,001 Ways to Reward Employees
Recently someone said that 95% of the American workforce is dissatisfied with their jobs! The cause may be the job itself, the boss or the company, but the bottom line is they're unhappy. Many people feel it's the money that makes people discontented with their jobs. But interestingly enough, money is rated sixth-below personal thanks, written thanks, promotion for performance, public praise, and morale-building meetings-when it comes to the top motivating techniques reported by employees. With the exception of promotion for performance, the others cost little or nothing! According to Bob Nelson, author of 1001 Ways To Reward Employees, "studies indicate that employees find personal recognition more motivational than money. Yet it is a rare manager who systematically makes the effort simply to thank employees for a job well done." Here are the top ten "fun" ways to reward your employees:
• Give an employee a dozen balloons; Wayne Baughman is the president of Creative Presentations, a communications, leadership and management training and speaking business. You can reach him at 513-481-4428 or www.speakingskills.com. |
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EDOCService-Impact Marketing Workshops October 24 and 26
Electronic Document Service, Inc. |
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very business owner knows how hard it is to build a business. Do you realize how easy it is to lose it? Do you want your business to dry up quickly? It is not uncommon for this to happen when basic internal accounting controls are not in place. In companies where one employee handles all monetary transactions, the risk of dishonesty and embezzlement is high. We all want to trust our staff, but experience and prudence says the accounting duties must be divided. Separate the duties of authorizing transactions, recording transactions, and maintaining custody of assets, especially when it comes to handling cash. There must be built-in controls for you or your staff members to double check what another person does to insure that the entries are recorded correctly, no information has been misused, and no assets are missing.