Internal Control Tip: The Importance of Written Controls and Procedures

Written control/procedure documents are essential to a high-functioning operation. They serve as institutional memory, a key communications tool for day-to-day activity and a clear roadmap. Who has time to be without such a document? The first time you have to sit down and figure out where the game receipts come from, how to transfer payroll or how to complete a drawdown of federal funds, because someone has, retired, passed away or quit, you will see the benefit of documented procedures.

But, how’s that Accounting Controls/Procedures Manual coming along? Have you spun your wheels sufficiently looking for that example online or in the archives of some school district community group only to be reminded that one size does not fit all? Have you run through the time it would take to create a document the size of your annual financial report and alter it to fit your school district’s needs? What if you don’t have the capacity to staff a separate project, the budget to outsource it or the time to sit with a consultant to explain your current controls to produce a comprehensive manual?

How do you eat an elephant?

One bite at a time.

Small bites. No one has 40 hours to put aside. But if you take 15 minutes a day, and have everyone pitch in, you can get there.

Start by taking things one desk at a time. In most offices, everyone has a job and no one knows that job better than the person assigned to it. Have everyone in the department write down the tasks that they do on a daily basis. I know, you can hear it now. “I do EVERYTHING! I can’t possibly write it all down!”

Ok, smaller bites. Have everyone keep a notepad or a Word document open on the computer. Have each member of the team keep a running list of the general tasks they performed in a week: sorted invoices, ran checks, worked on a special project, ordered supplies, etc. Follow up with team members every few days and check their lists. Soon their list should start to loosely resemble a job description. From there have the team member carve out, say, 15 minutes a day to flesh out what they were doing in each of these areas, preferably in an electronic format that can be shared. Ask them questions like, “How do you know if you did it right?” or “Where did you get the information from and who gets it when you are done?”

Once you have the bullet points fleshed out, begin reviewing, then ask yourself the following: Is this what team members are actually doing? Is this what they should be doing? Is this what they need to be doing moving forward? Follow up on this process by highlighting controls in place around the procedures documented, such as who reviews the procedures and how often.

After you have created a person-by-person set of procedures, link the procedures by classes of transactions, cash receipts, cash disbursements, payroll, reporting, etc. Consider adding screenshots for some tasks if that would be helpful. Replace names of staff members performing the individual procedures with position designations. Consider the need to reach outside of the department for a narrative of how information is processed before it hits your inbox. Remember not to expect operating departments to be any more enamored with creating a set of procedures than you were—they might not even like elephant.

So now you have a collection of tidbits that you can organize and layout in a procedures manual format. There is no wrong way or right way to do it. Put it together in the way that allows your team to use it as a reference or guide. Don’t wait until the document is complete or picture perfect because it never will be.

Take ideas from your team on how to go about adding procedures or enhancing descriptions in the future. Remember this will be a living document, so get your team to commit to a weekly review and update process. This document will provide some historical perspective, allow personnel to cross-train and establish a starting point for strengthening your internal controls going forward. After all, you are likely to have a few more elephants that need eating.

 

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