Organize a small-business method of accounting by function. Often there is just one person within the office to try to to all the transaction entries. From an internal control standpoint, this isn’t desirable because it opens the door for fraud and embezzlement. Companies with more people assigned to accounting functions don’t pose the maximum amount of a threat for fraud perpetrated by one person.
Having the identical person draft the checks and reconcile the checking account isn’t a decent example of the way to assign accounting duties. Small businesses often can’t afford the quantity of individuals needed for an adequate separation of duties; however, fixing a smart control structure within a replacement register helps mitigate that risk.
Assignment of Duties
Figure out who goes to try and do what during a new register. A business must cover the subsequent accounting responsibilities:
✔ Payroll. (Even if the business uses an outdoor payroll service, someone must be up to speed and be responsible.)
✔ Accounts payable.
✔ Fixed assets.
✔ internal control.
✔ Order entry.
✔ Monthly reporting.
✔ Internal accounting control.
✔ Overall responsibility for the accounting.
✔ Management of the pc system (if you’re using one).
In many cases the identical person will do many of those things. The person assigned to be in overall charge of the system should be the one who is most accustomed to accounting. If you’re just starting an organization, you will want to consider the background of the new employees.
At least one among them should have the capacity and integrity to run the register. to work out someone’s expertise during a field, one of the subsequent steps would be appropriate:
✔ Have the applicant be interviewed by an expert. Your own CPA will probably be glad to interview some for you.
✔ Carefully check references from past jobs. Ask detailed questions on exactly what the candidate did within the accounting function. Compare the reference source’s answers with what the candidate said.
✔ Ask some accounting questions. this may allow you to assess the applicant’s comfort with the language of accounting.