Controls to put in place for new accounting startup

As a new accounting startup, it's essential to establish controls to ensure the accuracy, completeness, and reliability of financial data, as well as to maintain compliance with accounting standards and regulations. Here are some controls to consider implementing:

  1. Segregation of Duties:
    • Assign specific tasks to each employee to prevent any one person from having too much control over financial transactions.
    • Ensure that no single person is responsible for both recording and reconciling a transaction.
  2. Authorization and Approval:
    • Establish a clear approval process for transactions, such as journal entries, invoices, and payments.
    • Ensure that all transactions are authorized and approved by the appropriate personnel.
  3. Accounting System Security:
    • Implement strong passwords and access controls for the accounting system.
    • Limit access to sensitive areas of the system, such as financial reporting and journal entries.
  4. Financial Reporting:
    • Establish a regular reporting schedule to ensure timely and accurate financial reporting.
    • Review and analyze financial reports to identify trends, errors, and areas for improvement.
  5. Internal Controls Over Cash:
    • Implement a cash handling policy that outlines procedures for handling cash, checks, and credit card transactions.
    • Ensure that all cash transactions are properly recorded and reconciled.
  6. Inventory Management:
    • Implement an inventory management system to track and record inventory levels, movements, and valuations.
    • Conduct regular inventory counts and reconciliations to ensure accuracy.
  7. Accounts Payable and Accounts Receivable:
    • Establish a process for reviewing and approving invoices and payments.
    • Ensure that all invoices and payments are properly recorded and reconciled.
  8. Fixed Asset Management:
    • Implement a fixed asset management system to track and record fixed assets, such as equipment and property.
    • Conduct regular fixed asset reconciliations to ensure accuracy.
  9. Bank Reconciliations:
    • Establish a process for reconciling bank statements to ensure accuracy and completeness of financial records.
    • Review and analyze bank reconciliations to identify errors and discrepancies.
  10. Audit and Compliance:
    • Establish a process for conducting regular audits and reviews of financial records.
    • Ensure compliance with accounting standards, regulations, and laws, such as GAAP and tax laws.
  11. Employee Training:
    • Provide regular training and guidance to employees on accounting procedures and controls.
    • Ensure that employees understand their roles and responsibilities in maintaining accurate and reliable financial records.
  12. Policies and Procedures:
    • Establish clear policies and procedures for accounting and financial transactions.
    • Ensure that all employees are aware of and follow these policies and procedures.
  13. Independent Review:
    • Engage an independent reviewer or auditor to review and verify financial records and controls.
    • Use this review to identify areas for improvement and ensure compliance with accounting standards and regulations.
  14. Continuous Monitoring:
    • Regularly review and monitor financial records and controls to ensure accuracy, completeness, and reliability.
    • Identify and address any issues or discrepancies promptly.

By implementing these controls, you can ensure the accuracy, completeness, and reliability of your financial records, as well as maintain compliance with accounting standards and regulations.