Internal Controls Made Easy

Nick Roberts

Now you may be thinking that internal controls are some strange abstract concept that only accountants get excited about and only big businesses need to worry about.  However, according to a recent survey more than half of New Zealand businesses continue to be the victim of fraud. So what can you do to prevent some of the more common problems?

  • Many employees involved in fraud have a history of dishonesty with previous employers.  Check references for ALL prospective employees and obtain a police check for those handling money.
  • Controls over bank accounts including dual signatories, not pre-signing cheques, regular and timely bank reconciliations and not forgetting to implement controls and passwords over internet banking arrangements which typically only require one-person authorisation.
  • If you have stock, keep track of and record stock receipts and issues promptly, carry out regular stock takes and investigate variations, measure stock-turn by product line and make sure you have arrangements in place to authorise and dispose of supposedly slow moving stock, ideally returning to the supplier.
  • If your business has cash takings, complete a daily cash register summary form, make sure under and over balances are investigated, bank cash received daily intact, ensure that large sums of money are not left lying around the premises and that separate cash floats are used for petty cash expenditure.
  • False invoicing is another favourite. Here, raise official orders for all supplies, match actual receipts to orders, only use a small number of approved suppliers, and get the relevant person or department to approve the invoice before payment.

A major fraud can break your business. The key to successfully preventing fraud, as with many areas of business, is systemisation. With a system, everyone knows what to do, you don't have to reinvent the wheel every time and it will be second nature to do things right. Get started today!


If you have any tax or business queries of any kind telephone 0800 ASK NICK, e-mail or use "Contact Us" on The information in this article is of a general nature and should not be relied upon as a substitute for specific advice.