Accounting Control Best Practices E-Book

Steven M. Bragg

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 318

Veröffentlichungsjahr: 2009

Beschreibung

Accounting Control Best Practices, Second Edition Control systems are needed to ensure that a company's assets are used in the most productive manner and that they are not lost through fraudulent activities. However, an excessive use of controls can interfere with the efficient completion of activities within a company. Whether your company is in start-up mode, installing new systems, or simply dissatisfied with existing controls due to fraudulent losses, Accounting Control Best Practices, Second Edition is the reference handbook every accountant and systems analyst can use to ensure that their company has constructed a durable and efficient set of controls. This easy-to-use handbook clearly explains how to develop an effective system of accounting and operational controls and offers the best practices with pragmatic insights and proactive strategies to protect organizations from suffering further substantial losses of assets and reputation that occur from financial dishonesty within an organization. Author and renowned accounting expert Steven Bragg provides control flowcharts in every chapter for all major processes as well as a thorough set of corporate policies designed to support the system of controls. Now containing chapters on budgeting, collections, and acquisition integration, this valuable reference handbook offers essential information on control best practices for: * Order entry, credit, and shipment * Inventory management * Billing * Cash-handling * Payroll * Fixed assets * Budgeting * Financial reporting * Just-in-time manufacturing * Petty cash * And many more Encompassing all of the major accounting and operational processes with nearly 500 controls presented in basic, intermediate, and advanced layers, from those needed for a very basic paper-based system, to computerized systems, to the use of advanced best practice enhancements in computerized systems, Accounting Control Best Practices, Second Edition is the only guidebook needed to devise a set of controls precisely tailored to every company's system.

Leseprobe

Table of Contents

Title Page

Dedication

Copyright Page

Preface

About the Author

Chapter 1 - Introduction

Introduction

1-1 Control Point

1-2 High-Risk Areas

Summary

Chapter 2 - Controls for Accounts Payable Best Practices

Overview

2-1 Basic Accounts Payable Controls

2-2 Controls for a Computerized Accounts Payable Environment

2-3 Automated Check Signing

2-4 Use Procurement Cards

2-5 Use Electronic Payments

2-6 Use Evaluated Receipt Settlement

2-7 Automate Repetitive Payments

Summary

Chapter 3 - Controls for Order Entry, Credit, and Shipment Best Practices

Overview

3-1 Basic Order Entry, Credit, and Shipment Controls

3-2 Controls for a Computerized Order Entry, Credit, and Shipment Environment

3-3 Integrate Credit Management into Order Entry

3-4 Receive Electronic Orders

3-5 Drop-Ship Ordered Items

3-6 Controls for Shipments to Evaluated Receipt Customers

3-7 Order Entry, Credit, and Shipment Policies

Summary

Chapter 4 - Controls for Inventory Management Best Practices

Overview

4-1 Controls for Basic Inventory Acquisition

4-2 Controls for Basic Inventory Storage and Movement

4-3 Controls for Inventory Valuation

4-4 Controls for Goods in Transit

4-5 Controls for Obsolete Inventory Determination and Handling

4-6 Controls for a Basic Perpetual Inventory Tracking System

4-7 Controls for a Computerized Perpetual Inventory Tracking System

4-8 Controls for Advanced Warehouse Systems

4-9 Controls for Manufacturing Resources Planning

4-10 Controls for Just-in-Time Systems

4-11 Inventory Policies

Summary

Chapter 5 - Controls for Billing Best Practices

Overview

5-1 Basic Billing Controls

5-2 Controls for a Computerized Billing Environment

5-3 Controls for Advanced Billing Systems

5-4 Controls for Credit Memos

5-5 Billing Policies

Summary

Chapter 6 - Controls for Collections

Overview

6-1 Collection Controls

6-2 Collection Procedures

6-3 Collection Policies

Summary

Chapter 7 - Controls for Cash-Handling Best Practices

Overview

7-1 Basic Check-Handling Controls

7-2 Controls for a Computerized Check-Handling Environment

7-3 Controls for Lockbox Receipts

7-4 Lockbox Truncation

7-5 Basic Cash Receipts Controls

7-6 Basic Credit Card Receipts Controls

7-7 Petty Cash Controls

7-8 Investment Controls

7-9 Cash-Handling Policies

Summary

Chapter 8 - Controls for Payroll Best Practices

Overview

8-1 Basic Payroll Controls

8-2 Controls for Cash Payments

8-3 Controls for a Computerized Payroll Computation Environment

8-4 Controls for Computerized Timekeeping

8-5 Controls for Payroll Self-Service

8-6 Controls for Direct Deposit and Payroll Cards

8-7 Controls for Electronic Remittances and W-2 Forms

8-8 Controls for Outsourced Payroll Processing

8-9 Payroll Policies

Summary

Chapter 9 - Controls for Fixed Assets Best Practices

Overview

9-1 Fixed Asset Controls

9-2 Fixed Asset Procedures

9-3 Fixed Asset Policies

Summary

Chapter 10 - Controls for Budgeting

Overview

10-1 Controls for Budget Creation

10-2 Controls for Budget Implementation

Summary

Chapter 11 - Controls for Financial Reporting

Overview

11-1 Controls for Financial Reporting

Summary

Index

To my parents, who exercised just enough control over me as a child to mitigate the risk of such dreadful occurrences as poor grades, car accidents, and entering politics

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Copyright © 2009 by John Wiley & Sons, Inc. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

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Library of Congress Cataloging in Publication Data

eISBN : 978-0-470-46413-7

Preface

This book addresses one of the primary concerns in accounting today—how to develop a comprehensive system of accounting and operational controls. This concern has been exacerbated by the provisions of the Sarbanes-Oxley Act, which requires public companies to report an assessment of their internal control structures, and which has led to comprehensive control examinations by all types of companies.

This second edition of Accounting Controls Best Practices describes a complete set of controls for a paper-based accounting process as well as for a computerized system, and then describes controls for more advanced best practices that are layered onto the basic computerized system. The second edition includes new chapters describing control systems for budgeting, collections, and financial reporting. By reviewing the nearly 500 controls for the various systems presented here, the accountant or systems analyst can devise a set of controls that is precisely tailored to the needs of his or her system.

Accounting Controls Best Practices encompasses all of the major accounting and operational processes, including the following:

Billing Budgeting Cash receipts Collections Credit management Evaluated receipts Financial reporting Fixed assets transactions Inventory transactions and valuation InvestmentsJust-in-time manufacturing Manufacturing resources planning Order entry Payroll Perpetual inventory record keeping Petty cash Procurement cards Purchasing Shipping

In addition, each chapter includes control flowcharts for all major processes. Further, to ensure that only enough controls are applied to not excessively reduce process efficiency, they are divided into primary and ancillary controls. This in-depth treatment makes Accounting Control Best Practices the guidebook needed to ensure that a company has constructed a durable and efficient set of controls.

This book is intended to be a reference handbook for accountants and systems analysts who design, monitor, and revise accounting systems, as well as for the internal and external auditors who review those systems for control weaknesses. It is also useful for accounting managers who must be aware of the control issues associated with any best practices they wish to install in their accounting systems.

STEVEN M. BRAGG Centennial, Colorado November 2008

About the Author

Steven Bragg, CPA, CMA, CIA, CPIM, has been the chief financial officer or controller of four companies, as well as a consulting manager at Ernst & Young and auditor at Deloitte & Touche. He received a master’s degree in finance from Bentley College, an MBA from Babson College, and a bachelor’s degree in economics from the University of Maine. He has been the two-time president of the Colorado Mountain Club, is an avid alpine skier and mountain biker, and is a certified master diver. Mr. Bragg resides in Centennial, Colorado, with his wife and two daughters. He has published the following books through John Wiley & Sons:

Accounting and Finance for Your Small BusinessAccounting Best PracticesAccounting Reference DesktopBilling and Collections Best PracticesBusiness Ratios and FormulasController’s Guide to CostingController’s Guide to Planning and Controlling OperationsController’s Guide: Roles and Responsibilities for the New ControllerControllershipCost AccountingDesign and Maintenance of Accounting ManualsEssentials of PayrollFast CloseFinancial AnalysisGAAP GuideGAAP Implementation GuideInventory AccountingInventory Best PracticesJust-in-Time AccountingManaging Explosive Corporate GrowthOutsourcingPayroll AccountingPayroll Best PracticesSales and Operations for Your Small BusinessThe Controller’s FunctionThe New CFO Financial Leadership ManualThe Ultimate Accountants’ ReferenceThroughput Accounting

Also:

Advanced Accounting Systems (Institute of Internal Auditors) Run the Rockies (CMC Press)

Subscribe to Steve’s accounting best practices podcast at www.accountingtools.com.

Chapter 1

Introduction

Introduction

This book contains hundreds of very specific controls over the basic processes of a business—order entry, shipping, billing, purchasing, and the like. These controls are presented in layers, beginning with those needed for a very basic paper-based system and progressing through computerized systems and the use of selected best practice enhancements to the computerized systems. Thus, users can find within these pages a variety of control systems for different levels of system complexity. As a supplement to the many controls detailed in later chapters, this chapter contains additional comments about the overall system of controls, high-risk areas, the segregation of duties, implied controls, the impact of the Sarbanes-Oxley Act, and the occasional need to deinstall controls.

1-1 Control Point

This book is entirely about the control point, which is an activity within a business process that will prevent or detect a process breakdown. For example, the requirement to have a supervisor sign checks is a control point; the key element in this control point is not the actual signing of the check, but rather the assumption that the manager will not sign the check without first reviewing the attached payment documentation to ensure that the payment is necessary. However, this control point is necessary only in a relatively disorganized purchasing environment where many people can authorize purchases. If a company were to impose a rigid requirement that all acquisitions must involve an authorizing purchase order, there is no longer a need for a control point represented by the check signer, since the purchasing department has taken over this role. Thus, control points can be activated or discarded, depending on the structure of the underlying process.