Financial Procedures and Internal Controls Internal controls Why - - PowerPoint PPT Presentation

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Feb 05, 2024 481 likes •630 views

Financial Procedures and Internal Controls Internal controls Why is this so important? Internal control why is this so important? Create valuable information on to the leadership on financial matters informed decision making

SLIDE 1

Financial Procedures and Internal Controls

SLIDE 2

Internal controls Why is this so important?

SLIDE 3

Internal control – why is this so important?

Create valuable information on to the leadership on financial

matters – informed decision making

Defines measurements of success
Strengthen value of external reporting through its reputation
Accountability
Internal: Board/Secretary General/employees
External: ZNCDA/donors/member/beneficiaries/governmental

institutions

Secure trust of donors, partners and beneficiaries
Minimize the risks of:
Errors
Fraud
Corruption

SLIDE 4

What are the characteristics of organisations with strong internal controls

Strong information system:

Ø Complete reporting Ø Timely reporting Ø Relevant Ø Understandable Ø True and fair Ø Etc.

Transparent procedures
Segregation of duties
Sufficient skills
Clear roles and responsibilities
Quick and timely response to challenges and problems
Order

SLIDE 5

Internal control tools

Proactive controls
Limitations (physical barriers, user settings etc.)
Segregation of duties
Acquire and maintain sufficient skills
Reactionary controls
Reporting
Approvals
Documentation of decisions and accountabilities
Internal and external auditing
Supervision

SLIDE 6

Pointers on internal control

The risk of fraud is always there
The possible cost of fraud should be limited
Errors and fraud should be revealed as fast as possible
Balanced control level – make risk analysis
Evaluate cost of control against cost of fraud and errors
Control levels in relation to risk
Think trust vs. control vs. bureaucracy

SLIDE 7

Fraud Theory and reports

SLIDE 8

SLIDE 9

ACFE – observed behavioral red flags in fraud cases

SLIDE 10

KPMG’s profile of a fraudster

Survey done i 2007
Based on 360 cases from Europe, Middle East and

Africa

The typical fraudster:
A member of the leadership
Often connected to the financial department
Exploits knowledge of the internal controls
Drived by opportunity of personal gain
Works alone in the fraudulent activities
Has been doing it for more than 6 months

SLIDE 11

ACFE report – behavioral red flags

SLIDE 12

SLIDE 13

Control weaknesses

SLIDE 14

Tools of a fraud

Forgery of documents and accountabilities
Witholding information and registration of transactions
Giving misinformation to management and auditor