Types of internal controls and corresponding solutions in the business

Sales and delivery control

- Reasonable commitment of delivery schedule: Before committing to the delivery date or another way, the salesperson needs approval.

- Receive orders in accordance with terms and conditions: Standardised and pre-numbered order form and the signature of the authorized person when accepting the order.

- Apply reasonable credit policies and check credit quality: Salespeople and approver cannot be same person. The roles and functions of these two positions should be separated.

- Deliver the exact quantity and type of products to the right customers: Delivery notes should be numbered, in addition to a possible record of the quantity delivered and for additional information from the shipper.

- Complete and accurate accounting of cash sales: Encourage customers use bank transfer to pay money, independently check cash funds, record the arising transactions on cash collection and use counting machines to accurately measure cash receipt ...

Purchasing control

- Only authorized persons will make purchase proposal: Standardize and pre-number form, signatures of authorized persons; reconcile to the ledger account.

- Prevent fraud in ordering suppliers: Separate ordering function and purchase proposal, the -purchasing department will be independent from the other rooms, orders must be pre-numbered...

- Control the receipt of unauthorized commissions from suppliers: Applying a method of requiring at least three quotes from three independent suppliers; swapping the position of sales staff after a certain period of time; introduce strict disciplinary policy if there is a violation of regulations.

- Receiving the right goods: Separating the function of receiving goods and buying goods; Pre-numbered goods receipt notes should be made every time the goods are received from the supplier; measurement of goods; Check quality; Receipt notes sent to the accounting department with full signatures.

- Prevent double / fake invoices issued by suppliers: Invoices should be numbered according to the order and reference number of the order.

- Accurate payment of purchases: The purchasing department should be responsible for notifying the accounting department of payment-related issues (discounts, returned goods, etc.);

In conclusion, all business should have a standardised form to enhance the control procedure for both sales and purchase cycle. The company also need pre-numbered form with full signature in order to prevent fraud in ordering and goods receiving activities. The valid order and delivery  form a basis for payment documents to be made.

Inventory and fixed assets control

- Protection of inventories: Accounting for inventories and cashiers must be separated from their functions; goods / products that are delivered and dispatched must have a receipt and delivery note with the storekeeper signature, so the inventory label should be labeled so that the goods are not lost or used for the product circulation note; detect discrepancies, check carefully.

- Keeping the complete registration of fixed assets: The accounting department should keep the fixed asset register for comparison with the fixed asset ledger; conduct a fixed asset count of all fixed assets periodically; update registration of fixed assets.

Cash and bank accounts control

- Cash control: Create a cash register recording cash - spend and manage cash; set a limit for cash payments; Regularly check the cash balance on the ledger with the cash book made by the cashier; Accountants and cashiers work transparently.

- Bank reconciliation: Compare the balance on the bank statement with the balance on the accounting book by the authorized person for checking (must not participate in the handling or accounting). If detecting discrepancies, they must immediately compare them with the relevant receipts and expenditures for handling measures.

- Controlling employees who perform bank transfers / withdrawals without permission: Increase the signature authorized level for money transfers exceeding a certain amount (Chief Accountant / Chief Financial Officer / General Director).

Information system control

- Authorize access to company documents: Synchronize employee accounts, each person uses an account to perform operations; Each person has access to different items depending on the job position; Keep a history of correcting / deleting / adding operations, or may block unrelated permissions so as not to affect internal control.

- Protect corporate databases and documents: Make backup copies of files and records; The process of making backup copies should be planned in detail; The important data should be stored in central server, network storage system (using RAID); and should not be kept on separate computers.

- Protect the computer system: Install anti-virus software, do not run any software without copyright / autorun without the approval of the appropriate IT manager.

In conclusion, the company need to have control procedure to prevent asset control risk such as fixed asset and cash by segregation of duties and signature approval from authorized person. Besides that, the company also need to have information system control to prevent the unauthorized disclosure of confidential information and restrict the access of sensitive information.