Archive for November, 2008

Key Internal Controls for Small Business Owners

Written by on November 7, 2008 | Accounting Best Practice

  1. Open all the mail!  This is often a quickly relinquished responsibility and it really shouldn’t be!  Awareness of key documents include tax notices, tax assessments, payables, bank statements, cleared cheques, customer payments and legal notices… all need the attention of the owner even for 5 seconds!   Tax notices highlight late payments which might be an indicator of untimely bookkeeping, cleared cheques should be checked to ensure they are all valid, bills need to be inspected for fraud or errors, and customer payments or lack thereof need to be monitored for deposit prioritization or follow up.  You don’t need to spend a lot of time- just open, check and hand off to bookkeeper… or scan/fax using QCDocs of course.  Also consider using QCMail services whereby you receive your mail by email… kills several birds with one stone.
  2. Sign all the cheques!   This is rarely not in effect as it is pretty obvious.  I would point out that you should make a habit of requiring the back up documents to support cheques which is often skipped (ideally the voucher – PO, Packingslip, Invoice).  Also note that dual signatures is always the best unless you are the sole owner/shareholder!  What if you’re out of the office a lot… then get QCDocs Systems so you can do all this online!  
  3. Monitor online bank accounts and general business activities.   Monitoring controls are very important as they ensure that you are aware of unusual transactions and unusual behaviors.  Trust in your accounting/bookkeeping staff is tremendously important and you should hire accordingly but it isn’t a control!  Fraud occurs when owners are just so trusting that opportunities arrise and we hear about those stories every so often in the press.  Monitoring controls… ie. just taking an interest, requesting reports, reviewing documents, inspecting files on occassion is key to shutting those opportunities down!
  4. Segregation and access controls-  Control of cheque stock is critically important. Do not place reliance on your signature and the bank review.  You need preventable measures to watch for fraud and identity theft these days so control your cheque stock.  Also monitor online bank accounts and make sure you can identify transactions- EFT’s (“Electronic Funds Transfers/online payments, etc) are being coming more and more common but they don’t provide enough information to understand nature of payments sometimes.  Also control access to payroll systems (ADP control pretty much gives person ability to write a cheque to themselves by creating and paying a fictitious employee) so monitor this closely.  Those big lump sum autowithdrawals need to be monitored for unusual fluctuations and tied out to payroll reports. 
  5. Timely, involved review of monthly financial statements and bank reconciliations.  This one is rarely done and poorly understood.   On the 15th of every month you should have received a 3 month trended balance sheet, 3 month trended  P&L, a budget to actual, a G/L for the the month, bank recs, AP, AR and fixed assets listing .  Get them if they are “ready” or not! and get some perspective on where you’re numbers are at.  If you don’t understand them go through them with your accountant and get them to give you some perspectives on them and what you should be looking for specifically- or I’ll save that for another blog.

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What has changed to make the paperless office a reality?!

Written by on November 4, 2008 | Paperless Back Office, QCDocs Best Practice

The paperless back office has long been dreamed of but just hasn’t happened!  The cost-benefit just hasn’t been there in terms of ease of use and practicality.  Here are my thoughts on why the world is now poised to finally see the paradigm shift happen!

  1. First let me point why I think it has taken so long to come about!  PDF just doesn’t work!   Everyone was waiting to see what electronic document format would be the defacto standard and everyone thought Adobe’s PDF format would be it.  Problem- slow to open (time a 1 page PDF versus 1 page jpg or gif), or the dilemma of opening whole file or just first pages (practicality of Accounts Payable), scanning challenges (what if pg 51 and 52 went together you have to scan the whole pdf again), try to name a pdf document while it is open…good luck!,  what if page 51 is upside down (pdf doesn’t have page by page rotation), open source… sure there are many pdf creator apps now… but they are not all fully compatible.  
  2. Solution- Image Documents– Fast to open (small file sizes without sacrificing quality), resulting ease of use, view and name editing capability, everyone has digital cameras and are extremely familiar with working with images,   The biggest problem with this is 1 file is one image (multipage-tiff being the exeption) so file management just doesn’t work or so you might think.  Surprise, surprise, software can solve this problem…welcome to QCDocs!
  3. Fraudulent Documents– Early concerns over the editability of electronic documents created a perceived “auditor” pre-occupation with fraud problems.     Again Adobe appeared to be the defacto standard to address this problem.  Practically everyone has come to realize that creating a manually fraudulent document is equally if not easier then with electronic documents and again there is a division between legal documents and electronic copies versus originals that is of course preserved in the paperless world. 
  4. Stability of Windows– So all your documents are saved on your computer.  Well the days of Windows crashing posed a considerable dilemma… this has been for the most part resolved.
  5. Big harddrives and system backups.   Storage of documents is no longer a concern… especially with 200-300 dpi image documents and ease of storage and search!
  6. Dual monitor videocards and LCD’s–  Ahhh yes plenty of room for two monitors- one for viewing documents and one for working in your legacy system!
  7. Scanners– Fujitsu well done!  Scansnaps should be in every small business office everywhere! Although they are still married to pdf… they slipped in JPG- well done!   HP, Brother, Epson, etc. multi-functionalprinter/scanners with multi-doc feeds and Twain scanner functionality… of course it is everywhere although get your default settings to accomodate office documents not only high res pictures of the family!!
  8. Online connectivity!  In my mind the piece that clearly shatters the cost/benefit divide is the connectivity of the paperless office to the internet!  Coupled with online banking security protocols this innovation enables the distributed workforce, telecommuting, outsourcing, mobile salesforce, mobile operations, distributed offices, global commerce to truly evolve.   It also enables the re-invention of the “ERP” by reversing the workflow… a concept I leave for next time!

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