11 Examples of Financial Controls

John Spacey, December 11, 2016 updated on April 19, 2017

Financial controls are processes, policies and procedures that are implemented to manage finances. They play a role in achieving an organization's financial goals and meeting obligations of corporate governance, fiduciary duty and due diligence. Controls may be implemented with accountabilities, responsibilities and automation. The following are illustrative examples of financial controls.

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.

Segregation of Duties

A clear segregation of duties exists between areas such as sales and revenue recognition.

Reconciliation

Reconciliations such as bank statements to general ledger.

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.

Overview: Financial Controls
Type	Financial Management
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	Security Controls Corporate Governance Due Diligence Fiduciary Duty