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Cloud Computing: What is it and Why Does it Matter?

Cloud computing (or “the Cloud”) has become quite the buzzword among businesses and nonprofit organizations. In fact, you’ve probably heard the term “the Cloud” thrown around quite a bit in your circles. Businesses and nonprofits are considering moving their data storage “off-site” to the Cloud. Software providers are developing Cloud-based software to support mobile trends. Even consumers are using the Cloud to store data on their mobile devices. Despite all of the buzz, however, many people do not have a true understanding of what Cloud computing is and what it means for their business or organization. In an effort to clear up some of the confusion, we’ve outlined the key takeaways for businesses and nonprofits to know about Cloud computing.

What is Cloud Computing?
Before you even consider using Cloud-based software or services, you need to understand the definition of Cloud computing. Cloud computing, to put it simply, is anything that involves delivering hosted services of the Internet. For businesses and nonprofits, Cloud computing generally refers to using web applications, software, or server services that you pay for on a regular basis as opposed to purchasing and installing the software and hardware. Businesses and organizations can store data in the Cloud, access their accounting software in the Cloud, or store important electronic documents in the Cloud. Cloud computing can mean many things, depending on how your business or organization plans to use it.

There are three types of Cloud computing: Infrastructure as a Service (IaaS), Platform as a Service (PaaS), and Software as a Service (SaaS). IaaS is the lowest level of Cloud computing and refers to a Cloud-based computing structure that is fully outsourced as a service. An example of an IaaS would be your web hosting company. PaaS is more advanced than IaaS in that it also offers a computing platform and solution stack as a service (rather than simply providing the infrastructure). These services are generally used by companies needing to develop, test, collaborate and deploy Cloud solutions for various applications. The hosting, however, is done by the PaaS provider.

SaaS is the most common type of Cloud computing (particularly for the use of businesses and nonprofits). SaaS is generally what people think of when they talk about “the Cloud”. SaaS (also known as Web-based software, on-demand software, and hosted software) refers to the use of software over the Internet. Rather than having to purchase software and hardware, businesses and nonprofits pay a regular fee to access the software online. The software runs on the SaaS provider’s servers, meaning the provider is responsible for all of the maintenance, security, and performance.

How are Cloud Services Different from Traditional Hosting?
Cloud services have three distinct characteristics that set them apart from traditional hosting services. Cloud services are sold on demand (you pay as you go); it is elastic (you can use as much or as little of the service as you want at any given time); and the service is fully managed by the provider (you don’t need anything but a computer and Internet access). Say your company or nonprofit organization is looking to store your data offsite. Rather than storing your files in a separate facility that is still susceptible to the elements and natural disasters, you could store your data in the Cloud. Cloud-based data hosting services are generally low-cost, require no physical hardware or documents, and can be canceled or added to at any time. In addition, your company or organization has instant access to the data you store in the Cloud, making it easy to view the information you need when you need it.

What Does this Mean for My Business or Nonprofit?
While some organizations and businesses are still concerned about the security of storing information and accessing software in the Cloud, many are moving to Cloud-based software and services. The Cloud is making it easier to regularly back-up important data, transfer files, share contact information, and access business information while away from the office. Many businesses are even using the Cloud to access their software via their phones so they can always stay up-to-date with the most current information.

Stay tuned to our blog for more information about Cloud computing and what it means for your business or nonprofit. We will be discussing current trends in Cloud computing, as well as be explaining the difference between the Cloud and on premise solutions. We make it a priority to stay current with business and nonprofit trends to help you achieve the best results possible.

If you’d like to learn more about how your business or nonprofit can use technology successfully, check out our technology consulting services. We can help you utilize your software solutions so you can achieve true success.

How Setting Internal Controls Can Protect Your Nonprofit Financials

How are you protecting your nonprofit organization’s financials? Do you have measures set in place to protect your funds from outside theft or internal mismanagement? As we’ve previously discussed, setting internal controls can help you create more accurate and effective financial reports; however, the benefits of setting internal controls does not end there. Internal controls can help you maintain good standing with your grantors, as well as ensure that you are meeting the proper financial guidelines set forth by the government. While accounting software can certainly help your organization manage your funds appropriately, internal controls can safeguard your financials from embezzlement, inaccurate reporting, fraud, and unauthorized expenditures. When you establish policies and procedures to protect your organization’s assets, you are establishing rock solid accountability with your donors and grantors and ensuring that your funds will be available when you need them.

We’ve created a few tips designed to help you set effective internal controls for your nonprofit organization:

Have a set definition of the various roles within your organization. All of your employees, volunteers, officers, directors, and trustees should have a clear understanding of their roles and responsibilities within the organization. Make sure to communicate the expectations and limitations of their jobs with each prior to hiring. Failure to do so could put your organization at risk.
Create a personnel policy that is easily accessible to your staff. Keep written record of your organization’s personnel policy and be sure to include information on vacation and sick leave, grievance procedures, evaluations, compensation, health insurance and other benefits, and your code of ethics. Provide your staff with a copy of this policy upon hiring and communicate important changes to the policy as they occur.
Establish procedures to monitor your organization’s funds. If your organization does not have an accounting procedures and policies manual, now is the time to create one. This manual should detail your organization’s financial controls and be reviewed by all directors and officers, trustees, employees, and volunteers. Your manual should at least include the following controls:
- Implement general organization-wide internal controls: This includes the preparation of your annual income and expense budget and quarterly reports comparing the actual receipts and expenditures to your budget. Make sure these reports are fully explanatory and address any and all time variances.
- Segregate financial responsibilities: Segregating financial duties and responsibilities is crucial to ensuring your financial integrity. Have a system of checks and balances in place, and make sure you have multiple people assigned to financial accounting, reporting and cash handling. Letting one person do it all is a recipe for disaster.
- Establish general IT controls: You will need to establish a specific process for accessing, inputting, and altering electronic data and information within your organization.
- Accounts Payable and Purchasing: Segregating the duties within the Accounts Payable and Purchasing department is important. Make sure you have multiple people handling the requests, verification, authorization, and recording of all expenditures (including the payment of invoices, petty cash and other expenditures).

Establishing internal controls now can protect your nonprofit financials in the future. Don’t make the mistake of doing nothing. Establish policies and procedures to ensure the financial integrity of your organization. If you’d like guidance on setting internal controls or simply need a review of your organization’s cash flow, contact us today. We offer a variety of nonprofit services designed to ensure that your organization is functioning as effectively as possible.

Is Your Small Business Ready for Tax Season?

Tax season is upon us and with it brings a substantial amount of stress, particularly for small business owners. If you’re already stressing about tax season, you’re not alone. Finding the documents and information you need to file your taxes can be challenging, especially if you haven’t been keeping up with your files year-round. Tax laws and deductions change yearly, and you have to research the latest information to ensure you file your taxes accurately. Preparing for tax filing alone is challenging enough; actually filing is a completely separate matter.

We’ve provided several tips to ease the burden of tax preparation and ensure that you make the April 15^th deadline. Keep the following in mind as you prepare for tax season (and remember to practice your deep breathing):

Always keep your personal and business expenses separate.
The IRS keeps a close eye on personal expenses that could be claimed as business expenses (such as using a business vehicle for personal reasons). Protect yourself by maintaining separate bank accounts and credit cards for your personal and business expenses. Keep good records to back up your claims. If the IRS does inquire about a particular expense, you will have the information you need to back it up.
Maintain good financial records year-round and research available deductions.
Proper record-keeping is crucial to ensuring that your taxes are filed accurately. Be diligent about maintaining your records all year so when it comes tax time, you have everything you need to file confidently. Make sure to save all essential paperwork that may be needed to back up deduction claims in case of an audit. Remember that tax credits and deductions change each year, so be sure to stay up to date on the latest information.
Take advantage of the tax credits within the Affordable Care Act.
This credit will cover up to 35% of the health premiums you pay to cover your employees. For the 2014 tax year, this credit will cover up to 50%.
Remember the Small Business Jobs Act Tax Provision.
Make sure you utilize the provisions within The Small Business Jobs Act of 2010. There are over 17 tax provisions designed to decrease the tax burdens for small businesses. While it may take some time to determine what you can claim, it’s worth the money you could save your business.
Avoid common small business audit traps.
It’s important for small businesses to know the red flags that capture the IRS’ attention. Classifying employees as independent contractors, claiming a home office deduction, and claiming large sum miscellaneous deductions are all huge red flags. If you do qualify for these deductions (and your employees are independent contractors), don’t hesitate to claim them. Just make sure that you have the evidence to back up your claims.

If your small business could use some helping preparing your taxes, give us a call today. Our team of experienced small business accountants and CPA’s can help you make sense of tax regulations and avoid audit traps. Take a look at our tax planning and preparation services to learn more about the services we can offer businesses just like yours.

Why Financial Transparency is Important to Your Business

Recent financial scandals among businesses and corporations have led to extreme distrust in America’s businesses. Today’s consumers are more hesitant to contribute to the financial success of businesses they feel of unethical and dishonest. In an effort to increase financial transparency among businesses, the government has implemented several new laws and financial reporting regulations. While these changes may seem like an inconvenience, they are actually beneficial to the long-term success of your business.

Financial transparency can help your business build and maintain trust with its customers and financial partners. When a customer knows that you are spending your money ethically and responsibly, they are more inclined to support your business through the purchase of your products and services. While it may seem instinctive for companies (particularly private companies) to keep sensitive financial data such as employment numbers and growth plans away from the public, sharing information about your financial performance is actually to your advantage.

When you are forthcoming about your business’ financial performance to your business partners, you minimize the risk of having your business as a partner. Having fewer unknowns can also increase your success when it comes to supplier relationships. By sharing your financial information with your suppliers, you might be able to delay payments to vendors by 30 days instead of having to pay in cash upon delivery. When your suppliers see that you can be trusted with a line of credit, they will be more flexible when it comes to payment.

Some companies have even seen an improvement in their bottom line increase after adopting internal financial transparency policies. Sharing financial information with your employees may be uncomfortable at first, but many companies are saving money because of it. When your employees see how their actions impact the company’s bottom line, they have an incentive to make changes and stick to their department budgets. By increasing your financial transparency internally, you are giving your employees the tools they need to stay on track and keep your business profitable.

If your business is interested in building the trust of its suppliers, partners, and customers, consider being a little more transparent with your company’s financial information. When your partners and customers see that your company is financially stable, their confidence in your brand will increase. Read our blog for more tips on increasing your business’ financial transparency through effective financial reporting.

Do you need help becoming financially transparent? Are you looking for an accountant to help you better manage your company’s finances? Beck & Company’s CPAs are available to assist your company with all of your financial matters – from helping you create more effective financial reports to assisting you with your tax returns. Give us a call today!

Do You Need Help Consolidating Your Business Budgets?

Budgeting is important to the success of your business. Without it, you have no idea of the amount of money coming in or going out of your company. Effective financial management requires you to maintain a budget annually for the entire company. This will help you ensure that you have enough capital to cover upcoming expenses, as well as help you prioritize your business ventures. Budgets are generally prepared on a department level and then consolidated to form the overall company budget. By consolidating budgets on a departmental level, managers can assess how their department is doing both as a whole and individually and also determine whether or not they have exceeded their budgeted amount.

The budget preparation process determines how the budgets within a company can be consolidated. Most companies know how to create a budget; however, many companies have a harder time consolidating budgets so they have a full view of their organization on a departmental level. We’ve created a few tips designed to help you consolidate your budgets and boost your budgeting efforts. Keep the following in mind as you go about consolidating this year’s budgets:

Create a plan for how your company will structure the budgeting process. You can structure it according to departments, locations, products, functions, and customer type. Each department should have their own budget that they can compare to other related units.
Use budgeting software to create and maintain your budget. It doesn’t matter what type of software you use – it can be spreadsheet-based or an off-the-shelf budgeting solution. Many accounting solutions also have a budgeting function to support your budgeting efforts.
Enter each expense into the appropriate line-item category and ensure that line-item categories are consistent across the company. Each department will have its own code in front of the line-item number so you can keep track of your departmental expenses.
Once the budgets for each department have been created, distribute them to their corresponding departments. Include specific instructions for each department on how expenses should be entered. While your accountant or bookkeeper will most likely handle the entries, there may be some confusion on smaller items, such as meal allowances.
Determine a plan for consolidating budgets. This is where you decide which departments, locations, or products will be consolidated and how. For example, let’s say your business owns a number of kiosks in area malls. Rather than maintain a separate budget for each kiosk, you could consolidate the budgets to include all kiosks under each supervisor. This will give you a more complete picture of your business without having to delve into every last detail.
Compare your budget against actual performance. Calculate the difference between your budget and the actual results using both a dollar amount and a percentage amount.
Prepare your consolidated budgeting reports for top executives. Business executives don’t want to see every detail; they want to see the big picture. Most budgeting software solutions can help you create a consolidated budget report. However, if you have trouble creating this automatically, you can create it manually by following these steps:

– Add up all sales.

– Add up all costs of sales.

– Subtract cost of sales from sales – this calculates your gross margin.

– Subtract admin costs from the gross margin – this is your gross profit.

– Subtract depreciation and interest from gross profit – this is your net profit.

Stay tuned for more tips and tricks to help you consolidate your business budget. For more effective business budgeting tips, read past articles on our blog. If you need help creating an effective business budget, contact our certified CPAs and accountants today.

Do I Need to Have Special Insurance Coverage for My Fund Raising Event?

As we discussed last month, it’s important to hold fund raising events throughout the year to increase donor support and contributions. These events are often large-scale and require extensive planning to pull off effectively. While they certainly have the potential to bring in a substantial amount of funds, these events are also a significant risk for nonprofits. In order to help alleviate the risk that comes with planning large-scale fund raising events, nonprofits need to invest in the proper amount of insurance coverage.

What is a Special Event?
Before we discuss the intricacies of special event insurance, you need to know what a special event is. A special event, by definition, is an event that falls outside of a nonprofits core function (think large-scale fund raising events). Because these events are not the “norm”, nonprofit organizations are limited in their experience and knowledge regarding the requirements surrounding these types of functions. Risks at these types of events can range from personal injury and accidents to fraud and theft, cancellation due to unforeseen events, and nonappearances by featured performers or hosts. Additional coverage can ensure that your organization is protected from all of the associated risks.

What Coverage Do I Need?
Now that we’ve established what a special event is and why it’s important to have special insurance coverage for your fund raising events, we need to explain the type of coverage you’ll need. Special event insurance does exist, and it offers nonprofits great protection from lawsuits and claims brought by a third party; however, this insurance is generally expensive and is not practical if you a planning a single event. Depending on the type of fund raising event you’re hosting and your current insurance coverage, it might be more beneficial (not to mention cost-effective) to extend one of the following types of insurance policies rather than investing in special events insurance coverage. Any of the below insurance policies can be extending to cover your fund raising event:

Comprehensive/General Liability: CGL insurance will cover claims that allege property damage or bodily injury. In the case of a special event, this coverage can be extended to include volunteers, members, temporary workers, outside sponsors, board members, and landlords.
Fidelity: Fidelity bonds protect your organization against the loss of money or property due to dishonesty among staff or volunteers.
Product liability: This insurance offers protection against claims resulting from injury or loss as a result of product malfunction from products sold or distributed at the event.
Weather: This type of insurance covers the losses resulting from the cancellation of an event due to weather reasons. While it is particularly important to outdoor fund raising events, it is not restricted to outdoor events.
Directors and officers liability: D&O insurance protects an organization from claims arising from managing directors or governing officials of the organizations. It includes coverage for both high-ranking staff and the members of the board.
Nonowned/hired automobile liability: If your volunteers or staff are using their own vehicles during the event (or if you are renting cars or hiring drivers), you may need this type of insurance coverage.
Nonappearance/cancellation: If your event is structured around the appearance of a celebrity or performer, this type of coverage could come in handy should he or she cancel. It protects your organization against all losses when your guest of honor fails to appear.

Your current insurance policy most likely covers some of the areas listed above; however, to be sure, you need to contact your insurance provider and see if your event has adequate coverage. If not, ask if you can pay a one-time premium for additional coverage during your fund raising event. While it may not seem crucial or necessary pay for additional coverage, you will wish you had the protection should someone file a claim with your organization after the event.

Make sure you include event insurance coverage in your event planning tasks and solidify any insurance changes or adjustments prior to the event. With the proper amount of planning and foresight, you can ensure that your fund raising events occur without a hitch.

Are you looking for more information on event planning? Stay tuned to our blog for more tips on planning a flawless fund raising event.

Is it Time to Hire an Accountant for My Business or Nonprofit Organization?

Running a business or not-for-profit organization is hard work. Not only do you have to effectively manage the day-to-day operation, but you also have to effectively manage and maintain your business and organization’s finances (which is no small feat). Many businesses and not-for-profits choose to handle their finances on their own in an effort to save money; however, the stress of managing these financial responsibilities on their own often leads to frustration and unintentional errors.

Businesses and not-for-profit organizations are not always aware of federal regulations and changing laws, and managing their finances on their own can become cumbersome as they have to commit more time to researching ever-evolving accounting regulations to maintain full compliance. Hiring an accountant or CPA would be beneficial in this aspect, as they have full knowledge of business and not-for-profit accounting regulations. Whether you decide to hire someone full-time or part-time, the help of a CPA can ease your business stress (at least where your accounting and finances are concerned).

If you are unable to keep up with the financial demands required of running your business or not-for-profit, it may be time to hire an accountant. If your answer to any of the following questions is “yes”, it’s time to actively look for a CPA or accountant to handle your finances:

Are you deciding on a business entity or trying to determine 501(c)(3) status?
Do you need help with your taxes?
Could you use some help with your financial reporting?
Are you being audited?
Do you need help differentiating between business and personal expenses for tax purposes?
Are you having a hard time comprehending your financial statements?
Do you need help determining which expenses are tax deductible?
Do you need advice about large purchases, such as buying or leasing a property for business use?

An accountant or CPA is qualified to help in the areas listed above. Whether you need help filing your taxes, determining an entity or not-for-profit status, or creating financial reports, an accountant is a wise investment. If your business or not-for-profit organization is searching for a CPA, give us a call today at (703) 834-0776. Our team of accountants and CPAs are more than qualified to help you with both your small and large accounting tasks.

Want to learn more about our client accounting services? Visit our Accounting Services page to learn how our experienced CPA’s can help you make sense of your company’s or nonprofit’s financials.

Not-for-Profit Fund Raising Tips for the New Year

The beginning of the year translates into a fresh start for not-for-profit organizations. If your organization did not meet your year-end giving goals, now is the time to refocus your efforts and start planning for the year ahead. Many not-for-profits are reluctant to start planning their fund raising efforts this early in the year, especially if they just completed their year-end giving campaigns. While the beginning of the year may seem like the perfect time to put your fund raising efforts to rest, it is actually the most ideal time to start planning your fund raising strategies and goals.

By now you should have a good idea of where your organization stands in terms of financial support and stability, making it the perfect time to formulate a new fund raising plan. Every not-for-profit organization knows that fund raising changes year to year, and – in order to effectively meet your fund raising goals – you need to have a detailed plan in place that addresses the challenges your organization encountered last year. We’ve created several tips designed to help you spur on your fund raising plans for the New Year so you can focus your efforts on more mission-related activities in the months to come:

Set specific fund raising goals. Before you can even begin creating a fund raising plan, you need to have some goals in mind. Determine how much money you need to raise, when you need to raise it by, and estimate the costs for your fund raising initiatives. Write down these goals and share it with everyone in your organization.
Brainstorm fund raising ideas. Before you start analyzing what worked and what didn’t work last year, brainstorm some new fund raising ideas to use in upcoming campaigns. There are many possibilities where fundraisers are concerned – walk-a-thon events, galas, online charity auctions, and charity golf tournaments to name a few. Choose ones that work well for your organization and with your mission. Engage your staff and encourage their input from the start so they feel involved in the planning process.
Solidify a plan for your fund raising event. Once you’ve decided upon the type of fund raising event your organization is going to hold, it’s time to begin planning the details of the event. Create a written project plan detailing everything, from goals, timelines, roles, and responsibilities. Assign key staff and volunteers specific tasks and equip them with the tools they need to get the job done. Set a tentative date for your fund raising event, and create a detailed timeline and checklist outlining everything you need in preparation for the event.
Identify prospective donors and sponsors for each event. For each fund raising event, you will need to create a list of prospective donors and sponsors. The donors and sponsors you choose will vary depending on the type of event and audience. Be sure to include local businesses, coworkers, friends, and family in your list of prospects and ask your staff to do the same.
Spread the word about your fund raising event. You need to have a plan when it comes to marketing your event. Create a fund raising page on your website where you can collect online donations and generate interest for your fund raising events. Send out emails detailing your current fundraiser, publish press releases, and post listings on local event calendars. Spread the word on social media so all of your followers are aware of your organization’s effort.

How is your not-for-profit planning on gaining support this year? Do you have a strategic fund raising plan in place? Keep the above fund raising tips in mind as you continue into the New Year, and – if you have any further questions – give us a call today. We offer a variety of nonprofit services to help you meet all of your nonprofit management needs.

Is Your NonProfit Following These Financial Management Best Practices?

NonProfit organizations are under increased scrutiny where financial reporting is concerned. As government and donor requirements continue to become more and more stringent, nonprofits are challenged with creating effective financial reports for their donors and grantors in addition to juggling the everyday challenges involved with running a nonprofit organization. Accounting solutions, such as Quickbooks, Abila MIP Fund Accounting (formerly Sage MIP Fund Accounting), Blackbaud, Microsoft Dynamics, Peachtree or Intacct, can help nonprofits effectively manage their daily accounting tasks as well as meet donor demands. No matter which accounting solution you use to manage your accounting processes, accounting software can help you create effective financial reports to answer your donors’ most important questions.

Accounting software can help nonprofit organizations develop good financial practices for years to come, as well as provide them with a clear view into their financial records so they can make better decisions for the organization. Nonprofits rely on accounting software to meet growing government and donor requirements, but in order to create effective reports they need to know how to use the software effectively. We’ve created a list of financial management best practices to help your nonprofit maintain effective financial reports:

Cash flow should be a priority.
Managing cash flow and contributing to cash flow projections needs to be a priority for nonprofit leaders. Accounting departments often lack the insight needed to create accurate cash flow projections, so nonprofit leadership needs to have a part in developing these projections. It’s important to anticipate cash flow issues and form a plan to solve any potential cash flow problems. Remember that timing problems can often be prevented by improving internal accounting systems, properly managing the timing of payments and receipts, and arranging for a line of credit.Many financial reports document spending trends from the past so nonprofits can easily review and analyze their financial habits. It’s important to run these reports regularly so you know how the organization’s cash flows and can address issues where it does not.
Create an annual operating budget.
Budgeting is an essential financial best practice for nonprofits and businesses alike. It’s important to compare your organization’s expenses to your annual income (this includes donations, grants, etc.). Your budget should include both guaranteed and as-yet-to-be-identified income; however, the Board and leaders need to be aware of the amount of unidentified income in the budget as well as the plan to raise funds during the year.
Don’t avoid “restricted” grants.
Restricted grants certainly require more reporting than regular grants and because of this, nonprofits often rule out these types of grants. Restricted grants, however, can be beneficial to nonprofits if you know how to handle them. Rather than looking at the restriction as a whole, you should consider what the grant is restricted to. If the grant is funding a program essential to your organization’s mission, accepting the grant would be in your best interest. If, however, the grant pulls you in a different direction than you’d like to go (or goes against your mission), you’re better off avoiding it.
Hire an accountant to handle your nonprofit’s finances.
Hiring an accountant is essential to your organization’s success. A professional accountant will not only ensure that your records are in order come tax season, but he or she can also help you manage your financial records in your accounting software and develop the reports you need to meet federal and donor requirements.

Are you looking for nonprofit accounting services? We offer our clients a variety of accounting and nonprofit services. Click here to learn more about our services.

If your nonprofit organization is in need of an accountant to help you better manage your finances and create more effective financial reports, give us a call today at (703) 834-0776.

Keys to Effective Financial Reporting: Setting Internal Controls

Since the passing of the Sarbanes-Oxley Act of 2002, businesses and corporations have had to reevaluate their financial reporting processes and procedures to comply with more restrictive federal laws. In an effort to protect businesses and organizations against costly errors and fraud, the government is cracking down on financial reporting and the storage of electronic financial documents. Business accounting software can only get you so far. While the software is certainly helpful in tracking and auditing your financial transactions, you need to develop sound internal controls to establish the required “separation of duties” (or “checks and balances system”). Financial responsibilities should be separated within a business or organization, and there should be policies implemented that discourage one person to have complete custody over the financial decision-making and review process.

Setting internal controls ensures compliance with Sarbanes-Oxley and protects the financial integrity of your company or organization. Below are several tips designed to help you set effective internal controls and increase the effectiveness of your financial reporting:

Do not let the person (or persons) managing your company’s bookkeeping functions handle cash.
Reconcile bank statements on a monthly (30-day) basis. Make sure this is done by someone who is not responsible for bookkeeping, cashiering, or depositing. When complete, these bank reconciliations should be reviewed by supervisors for accuracy and completeness. Make sure both the reviewer and preparer signs off on each monthly reconciliation so you can track who reviewed it.
Do not allow employees who handle cash have access to accounting records.
Reconcile all receipts with deposits made into the company account to verify that all collections are accounted for in the system (and bank). This task should be performed by someone who is not responsible for making the purchases or deposits.
All cash disbursements need to be approved by an employee who is not involved in the check preparation, bookkeeping or bank reconciliation process.
Checks need to be written and/or printed by someone who is not responsible for disbursement approvals, check distribution, or maintaining the company’s accounts payable ledger.
As soon as checks or cash is received, a receipt of payment needs to be prepared; all checks need to be endorsed immediately upon receipt.
The frequency of the deposits into your company or organization’s bank account should be determined by the volume of funds you receive. If your receipts total more than $500 (or a reasonable amount for your organization), they should to be deposited within a day. For amounts under the threshold, the funds can be properly secured in your office for a week or until the amount reaches the threshold.
Require two signatures on all checks for cash disbursements, and make sure at least one of the signers is not responsible for any cash receipt or disbursement functions.
Mark all paid documents (invoices, receipts, purchase orders, etc.) “PAID”, and write the check number and payment date on each document. This will ensure integrity and help you track when you paid what outside of your accounting system.

Setting internal controls is important to your company’s reputation. It can help ensure financial integrity, as well as help you create more effective (and accurate) financial reports. Stay tuned to our blog for more effective financial reporting tips.

Do you need help setting internal controls? Are you looking for ways to improve your accounting processes? Learn more about our accounting services – we’d love to help you get on the right track!