J. Miller and Company Blog

February 27, 2008

Splitting Financial Duties – Protect Yourself

Imagine that the primary financial duties are these [let me know what I might have missed, please]:

  1. Open the mail
  2. Approve field invoices
  3. Approve time cards
  4. Enter data into accounting program
  5. Process payroll
    • Write payroll checks
    • Pay payroll taxes
  6. Approve accounts payable for payment
  7. Enter accounts receivable invoices
  8. Receive accounts receivable checks
  9. Enter deposits
  10. Reconcile bank statements
  11. Prep financial statements
  12. Review and sign off on financial statements

Now, go through that list and put the initials of the person responsible for each.  There should be at least 3 different people touching the primary responsibilities.  Office manager/bookkeeper/data entry clerk for data entry; project manager for accounts payable/payroll and accounts receivable approval; and someone entirely different to reconcile the bank statements and sign off on the financial statements.

If you don’t have this kind of separation of duties, you might be putting the company and yourself in danger of embezzlement.  Especially if you use QuickBooks Pro.  This very popular and powerful program allows a high degree of modification to original entry and without a real-time (that means daily) review of the audit trail (print it out), you can’t be sure that your information is safe.

monthly column
Skip to content