Segregation of duties is a challenge in some office environments
The most basic, and one of the most important, internal controls is adequate segregation of duties. This can be difficult in small offices with only a few individuals available.
In such cases, the monitoring role of the board becomes even more important as this expanded control can offset the limitations of the management office.
This role may include additional monitoring activities which should be performed routinely by a member of the board or committee(s).
Czarnowski & Beer offers a checklist to aid in identifying potential areas for improvement in your management office’s functions. This allows your board to better coordinate activities to assure adequate segregation of duties for best practices designation.
Monitoring of financial reporting is a critical element of internal controls
An important internal control over operations is the monitoring of the financial reporting system. An integral part of the control system is a structured process to periodically evaluate the revenue and expenditures listed in the management reports.
While it is understood that board members serve as volunteers and the amount of time they are expected to be available is limited, the implementation of such a structured process for monitoring financial reporting systems is one aspect that should be a priority of the board operation.
Guidelines can be designed to assure adequate monitoring of the financial reporting process utilizing the most common budget comparison report.
Identifying incorrect payments is a key board duty
With the volume of invoices to pay for all of the entities, payments of invoices for other entities do occur. The most effective internal control to offset this risk is a board committee serving as a monitor of management, this can include reviewing substantial invoices paid as part of their periodic review of the management reports.
Our experience indicates that when a board meets in a scheduled format there tends to be an increased level of involvement in decision making. That is, significant issues tend to be more likely to be brought before the entire board for discussion and broad-based approval is given for the actions to be taken.
Depending on the needs of the operations these scheduled meetings may be monthly, bimonthly or quarterly. Special attention may be required more often than once or twice each year.
While adequate segregation of duties may seem tricky, the suggestions above will help any cooperative or condominium board complete these functions with ease.
For further assistance contact firstname.lastname@example.org or you can read more tips to help your board’s daily operations here.