Schools are the perfect places to find new opportunities and challenges at every turn. Furthermore, the next challenge your institution faces may not be in the classroom. The front and back office, which includes the accounting department also require effective internal controls. Here are some best practices that should mitigate or prevent issues from happening in your educational institution.
Segregation of duties
Typically, schools have small administrative groups, making the segregation of duties quite difficult. Even so, it is important to separate the activities of authorization, payment, and recording among staff members. For example, try alternating tasks between staff members, and using them as checks for each other.
With so many people coming in and out of schools, the risk of theft or damage to assets increases. Using some simple, physical internal controls can prevent damage or theft. Lock everything! Making sure your school’s doors are locked at all times will protect equipment. Petty cash and checks should be away in a safe. If feasible, electronic access cards and cameras are also good ways to increase security especially for high-value assets.
Today’s students are technologically savvy. Therefore, limiting their access to school computers is one control to implement. Furthermore, make sure school financial and administrative data are password protected with complex passwords that are changed regularly. The ability to add and remove programs should be exclusive to administrators. Access to internal information, whether it’s HR, Finance, or other administrative data, should also be limited to those who need it.
Schools benefit from proper accounting policies. Proper accounting policies can ensure all transactions are authorized, properly recorded, and not omitted from the records. School policies should include keeping a chart of accounts, proper approval steps, and sequential numbering. Map out the accounting internal controls for staff to follow.
Ethics training for all employees is one of the most important activities in internal controls. It will facilitate an ethical control environment across the organization. This mindset helps prevent and detect financial fraud and other unethical behavior. A code of ethics section in the employee handbook can also help let staff know what the expectations are.
For more information on internal controls in schools or Aronson, please contact Dan Kelley at email@example.com.