SLIDE 1
Learning Objectives
- Understand the basic elements of internal
control
- Understand electronic payments and internal
control practices
- Understand pros and cons of accounting
software – on-site, remote and cloud based applications
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Best Financial Practices in the Electronic Age MIE Financial - - PowerPoint PPT Presentation
Best Financial Practices in the Electronic Age MIE Financial - - PowerPoint PPT Presentation
Best Financial Practices in the Electronic Age MIE Financial Essentials September 6, 2018 Learning Objectives Understand the basic elements of internal control Understand electronic payments and internal control practices
SLIDE 2
SLIDE 3
Internal Control
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Questions:
- What is “internal control”?
- What are the elements of internal control?
- Are good internal controls possible in the
electronic age?
SLIDE 4
What is Internal Control?
- Objective of the accounting professional
– Produce accurate financial information
- Simplified view of some non-accounting staff
– Push a button and it’s done!
- Internal control is the bridge between the two
– A process to produce accurate financial information – Never done and finished – continually evolves as internal and external environments change
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SLIDE 5
Background
- Failures of S&L and other financial institutions in the
80s led to formation of Treadway Commission and ultimate development of COSO Report (COSO: Committee of Sponsoring Organizations of the Treadway Commission) – Developed guidelines for management to use in implementing recommendations of the Commission and designing effective internal controls
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SLIDE 6
Elements of Internal Control
- Control Environment
– Tone at the top – Oversight of board of directors – Commitment to hiring and retaining competent personnel – Holding personnel accountable for their responsibilities
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SLIDE 7
Elements of Internal Control
- Risk Assessment
– What can go wrong? – What is the potential for fraud?
- Control Activities
– What are the specific policies and procedures to address the risks identified in the risk assessment process?
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SLIDE 8
Elements of Internal Control
- Risk Assessment
– What can go wrong? – What is the potential for fraud?
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SLIDE 9
Elements of Internal Control
- Control Activities
– What are the specific policies and procedures to address the risks identified in the risk assessment process?
- Information and Communication
– What does each person need to know to carry out responsibilities – Communication can be internal and external to the production of information
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SLIDE 10
Elements of Internal Control
- Monitoring Activities
– Determine extent to which objectives are met – Should be ongoing and built into structure or may be performed by independent personnel – Includes establishment of corrective action and follow-up
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SLIDE 11
Wire Payments
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- What can go wrong?
- Call in
- Online
- Use of tokens
- Verification callbacks
SLIDE 12
ACH Payments
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- What can go wrong?
- Export file from software and upload to bank
- Data input to bank website
- Who can input and who can approve
SLIDE 13
Autopayments
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- What can go wrong?
- Who can set up?
- How are charges verified?
- Who monitors?
- How can they be stopped?
SLIDE 14
Employee Expense Management
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- What can go wrong?
- Available apps – see link for reviews
https://www.pcmag.com/article2/0,2817,2496149,00.asp Zoho Expense Expensify Certify Now Xpenditure Small Business ExpenseBot ExpensePath Receipt Bank Abacus ExpensePoint Concur Expense
SLIDE 15
Debit vs. Credit Cards
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DEBIT CREDIT Monthly Bills No Yes Application Process Easy More Difficult Spending Limit What's in the bank Credit Limit Interest Charged Can be high if not paid in full Security PIN Not as secure; merchants slow to implement upgraded technology Fraud Liability Requires more constant monitoring Low
SLIDE 16
Bill Paying
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Positive Pay applications
- Vs. Commercial bill payer (example: Bill.com)
- vs. DIY (Do It Yourself)
What can go wrong?
SLIDE 17
Best Financial Practices
- In reality, not much change from older
practices
- Still need:
– Segregation of duties – Documentation of transactions – Monitoring of transactions – Reconciliation
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SLIDE 18
Accounting Software
Pros and Cons:
- On-site
- Remote access
- Cloud
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SLIDE 19
Resources
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- COSO – Committee of Sponsoring
Organizations of the Treadway Commission
- ACFE – Association of Certified Fraud
Examiners
- AICPA – American Institute of Certified Public
Accountants
SLIDE 20
Contact Information
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Joyce Miller, CPA
Managing Principal
- J. Miller & Associates, LLC