Writing procedures is an exercise in controlling the cost of compliance.  You’re trying to comply with customer expectations, management objectives, government regulations, and/or industry standards, making compliance expensive.  Regardless of the reason for compliance, wouldn’t you want to write as few procedures as possible if you could still conform to the compliance mandate and keep your compliance costs to a minimum?

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Small public companies like yours may finally have to begin providing the Securities and Exchange Commission (SEC) with certified assessments of their internal controls.  Smaller micro caps will be required to comply with SOX 404(b) reporting requirements beginning June 15, 2010; they’ll have to attest to the effectiveness of their internal controls in their annual reports released on or after June 15 of next year.  So, for those whose annual reports are just seven months away, the time to consider is over — it’s time to take action! (more…)

Historically, compliance has been the focus of most knowledge management systems.  Documenting business processes with policies and procedures is required by many standards such as for ISO 9000 Quality Management Systems, Sarbanes Oxley Accounting and Finance, or Good Manufacturing Practices (GMP) for the Food and Drug Administration (FDA).  But if we look closer at the intent of these standards then we see that we should be more concerned with control, to improve quality or reduce the risk of failure. (more…)

In the past few weeks we have discussed how understanding and documenting your cash processes with cash policies and cash procedures can prevent internal fraud and abuse.  Externally, one the biggest threats to your cash are customers who fail to pay for what they purchase.  (more…)

We all hope our co-workers and employees are honest, and they probably are.  Yet, improper cash control and poor cash practices can tempt people who are basically honest.  Think about parking at the local mall.  You always roll up your windows and lock your car to protect your possessions, especially if you made some purchases at an earlier stop.  Most of the people who walk by your car at the mall are honest, yet you don’t want to tempt them by making it easy to take something that doesn’t belong to them.

Cash Security Is About Prevention

The same idea applies to your cash process; you want to use best cash practices and follow proper cash procedures.  In business you can reduce cash risk with good cash controls through removing opportunity and temptation.  While your employees may be honest, sloppy cash control is like leaving your car windows down at the mall… you are just begging for something bad to happen. (more…)

When you hear the phrase “internal control system required by Sarbanes-Oxley (SOX) Section 404,” do you automatically think of policies and procedures?  Simply having accounting policies and procedures does not indicate an internal control system.  Well-written accounting procedures that document well-defined accounting processes, however, are an important component of the internal control system you are building.  (more…)

It has been more than five years since most provisions of the Sarbanes-Oxley Act of 2002 took effect (in mid- 2003). Many publicly traded companies, however, still seem to struggle with developing a confident understanding of compliance. (more…)

We have been told repeatedly that there are two things at the heart of the current financial crises. The sub-prime home lending fiasco (with the bad loans then bundled into investment securities) and the credit default swaps that had organizations falling like dominoes once bad mortgage loans started taking some institutions down. (more…)

We are experiencing an avalanche in our financial system. Major financial institutions are failing to the shock of investors and depositors, and there is such a high level of uncertainty in the financial system that availability of credit has been shut off even to the most highly rated borrowers. (more…)

Question of the Month: How do policies and procedures fulfill requirements of Sarbanes-Oxley and other financial regulations?

This month’s highlight was the release of the Finance Policies, Procedures & Forms manual. Our newest product is the result of a nearly year-long effort of intensive research, writing, editing, and reviewing. The Finance Manual was finally ready for production and shipping last week. We are very pleased with this new product, and the response from our customers, to date, has been tremendous. (more…)