Internal Controls

Accounts payable is a process that delivers significant payments to vendors for goods and services and keeps local government operational. While the tasks that make up your accounts payable process may seem repetitious and mundane, they serve a critical business function—and they are vulnerable to fraud and error. When was the last time you took a hard look at your accounts payable process to ensure it's still designed appropriately and functioning properly?

When was the last time you reviewed and updated your deposit process? Deposits become so routine that it is easy to forget that your internal controls might need adjusting as your financial activity changes over time. On top of that, there are new options and technology for deposits that can help you strengthen your security measures.

Here are some tips and resources to get you started:

Looking for a way to improve your game when it comes to cash receipting internal controls? Add the double count to your arsenal. The double count is as easy as the name suggestions: money should never transfer from one employee to another without being counted and documented first.

Though it's simple, the double count is a necessary addition to your internal control processes for minimizing the risk of loss . Let's walk through a few scenarios to illustrate the concept and its importance.

Scenario 1: Fundraising in a school

Originally Published: August 24, 2021

As you enter into new federally funded contracts this year, you need to know if your contractor has been banned from doing business with the federal government. Commonly referred to as suspension and debarment, these requirements are fairly easy to comply with, yet they are one of SAO's most common audit findings. We first ran this article in August 2021, and due to its importance, we're republishing it as a reminder.

Do you ever wonder if a key control can be a person? Maybe you have a long-standing employee that everyone goes to for answers, or perhaps an employee that really knows and understands a certain process. People are most certainly an important part of the control system, and governments benefit from these valuable employees that contribute so much.

Local governments should ensure they protect against cybersecurity frauds in which an employee's direct deposit payroll gets redirected to a fraudster's bank account.

Set of modern electronic devices, computer laptop, digital tablet and mobile smart phone on wooden table

Recently, the Performance Center provided several resources on accounting for capital assets to help local governments with financial reporting. Another group of assets, which fall below a government's capitalization threshold, should also be considered when establishing and evaluating asset policies and other internal controls. In Washington, we frequently refer to these as “small and attractive assets,” but they these could be described using different terminology.

While cash transactions might be less frequent than those involving credit or debit cards, or have individual low dollar values, over time small daily losses can add up. According to the Association of Certified Fraud Examiners' (ACFE) 2016 Report to the Nations, the average median loss when cash was misappropriated ranged from $25,000 to $90,000.

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