You may have seen the recent buzz word control.
With GAAP 2018 rules around the corner, even though they never state you must have controls in place, it has made it into the conversation (check out the previously blog post citing BDO).
-Eliminates areas in the process where an error could have occurred
-Ensures reliability and integrity of financial information
-Creates more time in the day to actually peel through your calculations for processes
that can not be automated and are an area where you provide the most value for your
Among other ways internal controls have been touted (sources below).
So how do you set controls up in your accounting process? Can a spreadsheet be used as an internal control?
Controls in the modern accounting process as it relates to software ultimately boil down to automation of redundant tasks or as one client called it: “donkey work.” As seen in the sources, there are additional controls we could hit but they aren’t really new to the space. Let’s hit home automation first.
Why a spreadsheet can’t be an internal control: spreadsheets are known for being fraught with business risk (refer to 88% of Spreadsheets blog as well as sources). You could attempt to put controls in places but as noted in Theiia, even those controls are not seen as truly automated controls, free of error. That can really only be provided by an automation tool.
What does a good automation tool look like?
Your automation tools should seamlessly integrate with your current accounting software (on-premise, hosted, or cloud) and more often than not, work as both frontend and backend tool. A strong automation tool will allow for you to create the permissions, set it, and forget it. The QuickBooks Online app store has this for just about everything: automate your time tracking for payroll of hourly employees with TSheets or automate your revenue recognition and reporting with ProRata.
How to Set-Up Internal Controls for Automation Processes:
With a great internal control i.e. a great business tool, the how-to is simple:
- An email or a call giving permission for their dev team to set it up in your current accounting software
- Hop on, set the permissions/rules you want the software to follow
- Go back to focusing on the parts of your day that truly matter.
Internal Control Sources:
Washington University (http://f2.washington.edu/fm/fr/internal-controls)
Small Business Chronicle (http://smallbusiness.chron.com/seven-internal-control-procedures-accounting-76070.html)