Internal Controls | Segregation of Duties |
Authorization Procedures | Reconciliation Processes |
Operational Controls | Purchase Orders |
Invoice Approvals | Expense Controls |
Salary & Bonus Approvals | Inventory Management |
Budget Processes | Budget Oversight |
Spending Limits | Fraud Prevention Training |
Financial Audits | Disciplinary Actions |
Spending Policies | Access Controls |
Physical Controls | Procurement Processes |
Risk Management Controls | Contract Audits |
Vendor Audits | Standards Compliance |
Compliance Controls |
Internal Controls
Processes, procedures, automation and structures that are implemented to control an organization.Segregation of Duties
Assigning authority for key tasks to different individuals so that no one individual has too much power.Authorization Procedures
Procedures and systems for granting access to perform actions or access information.Reconciliation Processes
Comparing records across different systems and records to ensure they match up.Operational Controls
Controls on the daily processes of an organization. For example, checking that stock in an inventory database is actually physically present on a shelf.Purchase Orders
Formal requests for the purchase of goods and services.Invoice Approvals
Approvals for payments to vendors.Expense Controls
Policies, limits, reports and approvals for employee expenses.Salary & Bonus Approvals
Review and approvals of salary offers, salary increases and bonuses.Inventory Management
The processes that track and optimize inventory levels.Budget Processes
Budget planning, approvals and tracking.Budget Oversight
Monitoring of spending against approved budgets and management of variances.Spending Limits
Setting limits for certain types of spending and monitoring for violations.Fraud Prevention Training
Training employees to prevent, identify and report fraud.Financial Audits
Verification of financial records and transactions to ensure accuracy and compliance.Disciplinary Actions
Taking action to handle employee misconduct or policy violations.Spending Policies
Establishing guidelines and rules for spending.Access Controls
Systems and processes that prevent unauthorized access to systems and data.Physical Controls
Physical security measures such as secure storage of assets.Procurement Processes
Processes for selecting vendors and purchasing.Risk Management Controls
Processes for identifying and controlling risk.Contract Audits
Evaluation of contracts to ensure compliance.Vendor Audits
Assessments of vendor performance, invoice accuracy and adherence to contractual obligations.Compliance Processes
Processes for ensuring compliance to regulations, standards and internal policies.Accounting Standards
Adopting an accounting standard with knowledgeable staff who are accountable and responsible for its implementation.Financial Statements
Executive leadership such as the CEO and CFO are accountable to deliver timely and accurate financial statements such as income statements, cash flow statements, balance sheets and statement of changes in equity.Operating Metrics
Executive leadership such as the CEO, CFO and COO are accountable for delivering timely and accurate operating metrics such as profit margins.Policies
Policies are in place in areas such as general ledger, chart of accounts, recognition of revenue, reconciliations, invoicing, payment processing, inventory and asset management. Knowledgeable accounting staff managed by the executive team are responsible for implementing policy.Responsibilities
Clear responsibilities such as a person who is responsible for sending account statements to customers each month.Approvals
Approvals processes such as CFO approval of major sales deals looking at factors such as gross margins.Disbursement Policies
Validation of disbursements such as checking that each payroll payment is to a bona fide employee.Audit Trail
Audit trails are created and retained for events such as approvals, financial transactions and updates to financial documents.Information Security
Access to financial software and documentation is restricted to authorized personnel.Summary
| Overview: Financial Controls | ||
Type | ||
Definition (1) | Processes, policies and procedures that are implemented to meet obligations of corporate governance, fiduciary duty and due diligence. | |
Definition (2) | Structures, processes, policies, procedures and automations that are used to implement financial management. | |
Related Concepts | ||
