September 28, 2023

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Keys To Financial Accountability In A Business Environment

From time to time, you hear of a business losing a lot of money because one of the workers has embezzled some money. This normally does not occur in one day. In fact most of the time the worker starts taking the money in small amounts when he runs into financial difficulty. He may have the good intention of repaying the money in the account. The owner of the business may not realise it at the beginning as he may be very busy handling other business issues. As time goes on, the worker will begin to take bigger amounts and it becomes difficult for him to pay back the money. By the time the business owner finds out, it may be too late.
This is a very familiar story that occurs more often than not. This brings to mind the need for financial controls from the very beginning of the company. This can be done by

1. Ensuring the reliability of financial records,

2. Protecting both cash and assets, as well as

3. The promotion of efficient transactions. Measures have to be put in place to ensure that these three objectives are achieved in the business.

Most of the time, separation of duties among the workers makes it difficult for theft to take place. This also ensures checks and balances are in place. The appointment of an internal auditor also puts every worker in check.

Some of the measures necessary to ensure the above objectives are:

• Cash and cheques collected taken in by the business should be paid to the bank immediately. If the company needs money, petty cash imprest should be used and monitored. It should be made intact.

• A paper trail must exist for all forms of financial transactions. Paper tails like a receipt or a voucher.

• All payments to be made by cheque to avoid any ambiguity.

• The worker who does bank deposits should be different from the worker who handles cash as well as the one who does the bank reconciliation.

• If possible, numbered receipts should be used to avoid any cover ups.

It is important that these principles are instilled in the workforce from the very beginning. This makes it easy when the business grows in size. This also helps avoid the issue of embezzlement and saves the business owner a lot of pain.

The Author is the webmaster of [] an informational website where you can find all the information you need for the accounting needs of your business.