There
are ways, though you can reduce the chances of your department being on the
front page of the newspaper with a photo of your company president doing a perp
walk in hand cuffs. With some basic
business controls, procedures, and processes, you can make it harder for these
individuals, less tempting, and hopefully discover nefarious activities before
they become bank account busting.
This
isn’t about trusting good old Harry who’s as honest as the day is long. Honest Harry and others like him will welcome
financial controls because it removes trust from the equation and the
opportunity for questionable activities.
If the opportunity exists, somebody, eventually, will take it. Maybe not Harry, but who knows about the
gambling problem his brother-in-law, the company president has.
The
basics have a lot of common sense components.
You don’t need an MBA to put these in place.
·
Establish
rules. They need to apply to everyone—no
exceptions.
·
If
it involves cash, more than one person needs to be involved. This can’t be repeated too often, and as the
teacher said before the test, you will see this material again.
·
Have
a line item budget. The treasurer should
monitor receipts and revenue versus that projected. Likewise, the expenditures for each line item
should be noted. A monthly report with
this data provides a transparent picture to the organization and helps the
leadership with their management responsibilities.
·
Reconcile
bank accounts on a monthly basis. Another
job for the treasurer, right?
Wrong. Someone other than the
treasurer or anyone else handling funds or writing checks should have this
job. This provides an independent
verification and removes one obvious opportunity for someone to cook the
books.
·
Periodic
audits. Annual is best, but at least
every couple of years, an audit should be completed. When treasurers change is also another good
time to ensure a clean bill of financial health. Accountants are expensive, you say, and you’re
right. If the funds are hard to come by
to pay for an audit, consider asking a local CPA who lives or works in your
first due if they would consider doing it as a donation. Wait until after tax season, though. Ask if they see any opportunities to improve
financial management, procedures or record keeping. Use their expertise to your advantage.
·
The
two (or more) person rule. Multiple
signatures on checks, counting cash, opening mail, are all times to have more
than one person involved. Cash is not
your friend when it comes to financial safeguards. Minimize it where possible and always, always
have more than one person involved.
This
isn’t a comprehensive list but just these few items will go a long way in
limiting the opportunity for financial funny business.
So
it’s all about the money, right? Wrong;
the money is important but the main issue is trust. Not
Honest Harry, the long term treasurer. The
trust of the citizens we’ve sworn to protect is what we need to ensure. It is easily damaged and difficult to
repair. We’re the stewards of that
trust, measured by how we take care of their money—whether raised by taxes or
chicken barbecues and pancake breakfasts.
These folks have the right to know that it’s being spent carefully and
honestly.
