Todays Keys What are Internal Controls Financial Close Controls - - PowerPoint PPT Presentation

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Jul 19, 2023 199 likes •389 views

Todays Keys What are Internal Controls Financial Close Controls Where to Find Resources Community Foundation 1 What are Internal Controls Community Foundation 2 Objectives of Internal Control are Interrelated Reduce risk of loss

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Today’s Keys What are Internal Controls Financial Close Controls Where to Find Resources

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What are Internal Controls

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Objectives of Internal Control are Interrelated

Ensure reliability Compliance Reduce risk

f loss

Safeguard Assets

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Control Environment

Overall awareness & importance
Management & Board set tone
Technical Competence
Disciplined structure=consistency
Maintains ethical commitment

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Financial Close Controls

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What is Financial Close

Sequential steps dependent on each other
Potential errors are identified & corrected
Adjusting entries are made
Reconciliations take place
Trial balance prepared
Culmination of financial statements

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Set Expectations

Monthly closing = mini audit
Closing checklist
No one person controls entire process
Timeliness
Reliability of data
Not enough staff to segregate duties?

Use compensating controls

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Compensating Controls

Use Board or Committee Involvement to

Approve expenses over certain $
Approve payroll
Review financial information monthly
Review bank reconciliations
Require a second check signature
Open & review bank statements

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Manual Journal Entries

Month-end journal entry checklist
Use journal entry templates
Verify posted as expected
Look for unexpected balances
Investigate any unusual entries

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Cash Reconciliation

Supporting bank statements
Cash receipts log verified to bank

statement

Transfers verified
Items in transit verified
Cleared checks compared to check

register

Investigate voided/stale checks

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Reconcile balance sheet accounts

Review activity posted
Confirm work papers agree to GL

Review revenue/expense accounts

Look for reasonableness
Compare to budget
Compare to prior periods

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Generate trial balance

Ensure accounts carry appropriate balances

ie: assets = debit, liabilities = credit

Ensure debits = credits
Prelude to financial statements

Prepare financial statements

Statement of Financial Position
Statement of Activities
Make it difficult to change prior periods

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Financial Statement Review

Management
Audit/Finance committee
Board of Directors

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Annual Audit = Smooth Sailing!

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If Fraud Happens

Have a plan
Punish the offender
Report to law enforcement
Recover stolen money

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Resources

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Resources

Today’s Slides
Community Foundation Financial Close Chart
Resource Listing & Related Material

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Questions & Answers

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