Financial controls, also known as internal controls, are vital policies and procedures put in place to keep financial records in check and protect company assets. But most businesses don’t have strong controls set up, according to our recent research.
Recent research from ApprovalMax shows three out of four businesses don’t have the right financial controls in place to protect their business, and only one-quarter (25%) of businesses report having strong financial controls in place.
As trusted partners for these businesses, accountants and bookkeepers are in a powerful position to help their clients add these vital controls to protect their assets. They’re usually embedded in a business’ financial operations and can spot weaknesses or gaps in processes, plus have knowledge on best practice from their industry experience.
In some cases, these extra controls are also useful for accountants and bookkeepers to manage risk and responsibility.
The importance of financial controls
Many accountants and bookkeepers have seen first-hand the power of having strong controls in place, like segregation of duties, internal audits, and reconciliations. In one situation, Brendan Lucas, Head of Accounting APAC at ApprovalMax, says a client checked the bank details for an invoice and figured out that it was a scam – it had been intercepted and the account numbers were changed, but luckily they picked it up. In other situations, he had clients without those controls in place who ended up paying money to the wrong supplier.
Meanwhile, Stuart Hurst, Head of Accounting EMEA at ApprovalMax, has also seen big benefits from building strong financial controls for clients. “We saved a client over £10k over a six month period by bringing in a robust purchase order system. Previously he was paying for stuff that never arrived!”
Using technology to build strong financial controls
Setting up strong controls is one thing. Getting people to follow them, each and every time, is another. Thankfully, technology makes light work of this using automation. This takes the responsibility off individuals to manage the process and means you’re less likely to encounter human error.
For example, automated approval workflows can easily be set up to follow complex approval matrixes and ensure a document, like a PO or bill, is always seen by the right people before it’s approved. Tools like ApprovalMax even notify you if a document bypasses the proper approvals process before going into the general ledger.
With cloud-based accounting now the norm, it only makes sense for technology to play a role in other financial processes. CPA Australia found the vast majority (81%) of APAC businesses surveyed used cloud computing technologies, with 76% using ERP tools.
Having the right financial controls in place helps businesses manage risk, minimise the potential for fraud, and protect valuable company assets. Technology not only puts these robust controls in place, but makes them easy for clients to follow.
For more information on ApprovalMax, visit approvalmax.com
To learn more about building strong financial controls, check out our blog or read our latest guides for businesses using Xero or QuickBooks Online.
