Best Financial Practices in the Electronic Age MIE Financial - PowerPoint PPT Presentation

Best Financial Practices in the Electronic Age MIE Financial Essentials September 6, 2018

Learning Objectives • Understand the basic elements of internal control • Understand electronic payments and internal control practices • Understand pros and cons of accounting software – on-site, remote and cloud based applications 2

Internal Control Questions: • What is “internal control”? • What are the elements of internal control? • Are good internal controls possible in the electronic age? 3

What is Internal Control? • Objective of the accounting professional – Produce accurate financial information • Simplified view of some non-accounting staff – Push a button and it’s done! • Internal control is the bridge between the two – A process to produce accurate financial information – Never done and finished – continually evolves as internal and external environments change 4

Background • Failures of S&L and other financial institutions in the 80s led to formation of Treadway Commission and ultimate development of COSO Report (COSO: Committee of Sponsoring Organizations of the Treadway Commission) – Developed guidelines for management to use in implementing recommendations of the Commission and designing effective internal controls 5

Elements of Internal Control • Control Environment – Tone at the top – Oversight of board of directors – Commitment to hiring and retaining competent personnel – Holding personnel accountable for their responsibilities 6

Elements of Internal Control • Risk Assessment – What can go wrong? – What is the potential for fraud? • Control Activities – What are the specific policies and procedures to address the risks identified in the risk assessment process? 7

Elements of Internal Control • Risk Assessment – What can go wrong? – What is the potential for fraud? 8

Elements of Internal Control • Control Activities – What are the specific policies and procedures to address the risks identified in the risk assessment process? • Information and Communication – What does each person need to know to carry out responsibilities – Communication can be internal and external to the production of information 9

Elements of Internal Control • Monitoring Activities – Determine extent to which objectives are met – Should be ongoing and built into structure or may be performed by independent personnel – Includes establishment of corrective action and follow-up 10

Wire Payments • What can go wrong? • Call in • Online • Use of tokens • Verification callbacks 11

ACH Payments • What can go wrong? • Export file from software and upload to bank • Data input to bank website • Who can input and who can approve 12

Autopayments • What can go wrong? • Who can set up? • How are charges verified? • Who monitors? • How can they be stopped? 13

Employee Expense Management • What can go wrong? • Available apps – see link for reviews https://www.pcmag.com/article2/0,2817,2496149,00.asp Zoho Expense Expensify Certify Now Xpenditure Small Business ExpenseBot ExpensePath Receipt Bank Abacus ExpensePoint Concur Expense 14

Debit vs. Credit Cards DEBIT CREDIT Monthly Bills No Yes Application Easy More Difficult Process Spending What's in the bank Credit Limit Limit Interest Can be high if not paid 0 Charged in full Not as secure; merchants slow to Security PIN implement upgraded technology Fraud Requires more Low Liability constant monitoring 15

Bill Paying Positive Pay applications Vs. Commercial bill payer (example: Bill.com) vs. DIY (Do It Yourself) What can go wrong? 16

Best Financial Practices • In reality, not much change from older practices • Still need: – Segregation of duties – Documentation of transactions – Monitoring of transactions – Reconciliation 17

Accounting Software Pros and Cons: • On-site • Remote access • Cloud 18

Resources • COSO – Committee of Sponsoring Organizations of the Treadway Commission • ACFE – Association of Certified Fraud Examiners • AICPA – American Institute of Certified Public Accountants 19

Contact Information Joyce Miller, CPA Managing Principal J. Miller & Associates, LLC 1617 John F. Kennedy Blvd. Suite 1210 Philadelphia, PA 19103 215-600-1701, x 101 215-205-0072 Mobile jmiller@nonprofitcpas.net 20