In our most recent newsletter, we discussed how fraud exposure can result without internal control.
An important – and obvious – component to internal control is ensuring the controls that are established are working as intended.
One of our Clients had established internal controls for ensuring there was management oversight on accounts payable. This control required the Controller to review and approve any accounts payable transaction.
However, the Controller got busy and was not as thorough in ensuring the control was in place. Because there was not oversight, one of his Managers became creative, resulting in that Manager embezzling over $1 Million.
If the Controller had been diligent in complying with the control, the Manager would not have been able to take the money.
The lesson: internal controls need to be established AND working as intended! Routine testing of the controls help mitigate the risk.
If you would like to evaluate the effectiveness of your internal controls and/or would like assistance within testing the controls, contact Charlene Aldridge at 972.447.9787 or CharleneAldridge@aldridgekerr.com to discuss how we can assist you in ensuring your controls are in place and working as intended!!
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