Financial Management

Internal Control Methods

  To run any organisations’ financial systems in a proper and systematic way, internal control mechanism need to be set up.      This will also help the organisation develop systems and minimize the possibility of mismanagement of funds.   Some of the internal control methods are given below: 

• Allocate functional responsibilities within the  organization and it should   be  documented.

• Organisations need to have procedural document 

• Steps need to take to see that the assets are  safeguarded  

• Organisation need to see that the staff  are competent enough to take up   the job   responsibility.

• Review the work done by one individual by another

• Guidelines should be prepared for Finance

• Organogram should be prepared

•  budgets  need to be prepared in a planned manner 

•  should have control methods to see that the budgets  are utilized as planned and periodic reviews should be done. 

• Ensure stock/asset registers are maintained and physical verification  should be  done from time to time 

• See that all the requires are maintained. 

• See that all the assets are insured

• Cash in transit and cash in hand should be insured 

•  Handling of cash should be in one persons responsibility 

• Cash in hand should be minimal 

• Payments to be made by cheque 

•Authority levels for payment need to be defined  

• Bank accounts should be operated jointly 

• All payments should proper supportings 

• Internal audit should carry out random physical verification  

• Monthly bank reconciliation need to be done

• Staff should be issued Appointment Letters  

• Attendance register need to be maintained 

• Fixed assets and capital expenditure  need to be approved  by the  Executive Committee 

 • Purchasing committees should be set up and purchases should be made  after  proper tenders/ minimum three quotations   

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