Have two or more people approving payments
It may seem obvious, but having more than one pair of eyes will help protect your business from anything that appears suspicious or incorrect. It also protects your employees from making unintended errors and ensures that processes are adhered to.
Ensure all payments and accruals have supporting documentation
Documentation should include approvals, both of authorising the invoice and authorising the payment.
Note down the purpose of each expense
This is particularly important where the purpose of an expense is difficult to determine — for example, purchases at a cafe. Be specific so there is no uncertainty.
Check appropriate segregation of duties are in place
Segregation of duties is basic risk management and implements an appropriate level of checks and balances.
Do not allow those with the ability to approve invoices to pay them
Sometimes the size and economic considerations of a smaller organisation can limit the extent to which segregation of duties is practical. Nevertheless, having someone approve and pay an invoice may lead to an increased risk of misappropriation.
Check that people have appropriate levels of access to online banking systems
Regularly checking who has access to what is a simple but essential security measure.
Ensure petty cash and bank accounts are regularly reconciled
Reconciliation should be done at regular intervals, such as monthly or quarterly. The reconciliation itself should also be reviewed to check for errors or fraudulent activity.
The governing body, or the finance subcommittee, must review and be aware of payments made
This is particularly important for smaller organisations where segregation of duties is not possible. For larger organisations with an appropriate expenditure delegation policy in place, monitoring expenditure against budget can be sufficient.
Double check bank account numbers in online banking payments
Again, it might seem obvious — but mistakes do happen!
Does your current payment and approval process incorporate any of these tips? No worries if it doesn’t, our team can have a chat with you about getting set up — we are more than happy to help! Reach out to us today at info@kendons.co.nz.