The Three Areas of Procedural Review

Written by the Controller | CFO Advisor Team

In order to continue thriving in the long run, a company should understand the influences that can drastically alter its future prospects.  They can result from changes that take place both internally and externally to the organization.  To safeguard and protect the business’ assets, a company should perform procedural reviews as discussed below.

1. Risk Management - Risk Management is the means by which a company can identify, assess, and control risks that may be present within their business infrastructure or operations.  It is an important deterrent to fraud.  The following steps should be followed when implementing these procedures.

1. Assessment is the activity that determines which risks the company faces and the potential severity of their impact on the well-being of the business.  List the risks; decide how to deal with each risk; assign individuals to carry out the action items; begin to develop a list of risks to address at a later date.  (Note not all risks can be handled immediately and will need to be prioritized.)  The risk management program is a “living” document that will be reviewed and modified at specific time intervals.
2. Develop risk management strategies for: Finance; Information Technology; and Operations. 
3. The combination of the above steps represents the company’s overall risk management plan.  The documented plan describes in detail the actions needed to address the risks identified in the risk assessment.  The plan should include strategies such as:
   
   
   1. Resources needed to address these risks
   2. Techniques used for each risk
   3. Responsibilities and time lines
   4. Metrics to evaluate whether the strategies are successful
   5. Documentation of prior losses and risk issues

2. Business Continuity Planning (BCP) – BCP is the process a company uses to develop and document the policies, procedures, activities, and protocols they deem necessary to resume essential business operations immediately following a business interruption. 
   
   
   1. Develop a solid crisis communications strategy to handle the initial crisis; it must preserve the company’s good name while providing quality information to support emergency customer service.  Document a crisis communication plan worksheet.
   2. Once the company has dealt with the initial crisis, it needs to begin work immediately to resume operations. 
   3. Develop an emergency customer service component.  Customers need to know how to reach the company and how long their dealings with the company will be affected by the interruption.

   The company should identify possible business interruption situations and determine crucial functions that are essential to continue doing business.

3. Internal Controls – These are the policies and procedures that protect the assets of an organization, facilitate reliable financial reporting, promote compliance with laws and regulations, and achieve effective and efficient operations.  The following functions need to be reviewed:
   
   
   1. Cash Receipts
   2. Cash Disbursements
   3. Accounts Receivable
   4. Accounts Payable
   5. Petty Cash
   6. Check Signing
   7. Payment Documentation
   8. Inventory
   9. Employee Advances
   10. Employee Travel
   11. Payroll
   12. Fixed Assets
   13. Bank Statement Reconciliation

Establishing, maintaining and reviewing the company’s internal control policies and procedures is an essential part of safeguarding the company’s assets.

BIK’s outsourced Controller|CFO Advisors can assist in your risk management review, your business continuity planning, and review of internal controls.

The BIK Controller|CFO Advisors:

Tony Battaglia
Tim Beck
Al Knox
Larry Schmitt
Mark Stricker

Together we can perform a variety of accounting and financial services to help your business run more efficiently and economically.  Our objective will be to improve your bottom line through better processes and procedures. Contact us today at cfoservices@bikcpa.com or call 847-281-3209. 

Visit our web-site at www.bikcfoservices.com.