The New Normal of Internal Controls - Wegner CPAs (2024)

How should I adjust my internal controls while working remotely?

It’s no surprise that one of the most commonly asked questions our assurance department receives from clients lately is “how should I adjust my internal controls for COVID while working remotely?” It’s a question everyone is curious about and looking for recommendations on. The answer isn’t as cookie-cutter as some may think, given that each organization’s internal control structure depends on a variety of factors, but we’re here to provide helpful recommendations that any organization can implement.

Two people open the mail and document receipts

For those organizations that have gone through an audit before, you’ve more than likely had a conversation with your auditor about how important it is to have at least two people open the mail and document the cash or checks (receipts) received at that time. During COVID, many organizations are not going to their offices on a daily basis and no longer having two individuals open the mail. While social distancing for your organization is encouraged, there still needs to be two people overseeing the mail opening and check/cash documenting process.

If only one person is able to go on site to get the mail, consider having another staff member use FaceTime or Zoom to watch the mail be sorted, processed, and documented by the employee. You could then have the second staff person send an email to someone separate of this process to document the control and keep a copy of the email for your records each time the mail is opened and documented.

A check/cash review log is something that could be shared on the network drive between all employees so everyone is able to see what checks/cash is coming in daily. This log should then be compared to the monthly bank statement to ensure all checks/cash received in the log actually was deposited in the bank and should be performed by someone separate of this receipts process (perhaps a board member).

Another suggestion is to have the post office hold the mail until a particular date when the mail can be picked up by two individuals to then be sorted, processed, and documented at that time. Perhaps there is a day each week that two individuals are able to meet to perform this task – talk to your staff and see if this is something you can implement.

Lastly, for any receipt that can be directly deposited into your organization’s checking account, ask that it be set up this way. This helps eliminate much of the risk in organizations with limited segregation of duties and cuts down on the number of checks/cash sitting in the mail for your organization.

Go paperless

Regarding disbursem*nts, COVID has been a great time for our clients to start going paperless with bills and do more electronically! There are a number of electronic ways to process bills that are cost effective, and once you start this, this will definitely be your organization’s ‘new normal’.

You’ll want to keep in mind that with disbursem*nts, there will still need to be a documented review and approval of each invoice during COVID. The following recommendations may be helpful for your organization:

1. Sign up with Bill.com, which is an online bill paying software. You are able to set up approvers within the system. When you receive an invoice, you upload the invoice into the Bill.com system, and the approver receives a notification that an invoice was sent to them to be approved. The approver is then able to approve the invoice on any device (and from anywhere), and once approved, Bill.com pays the vendor. You’re able to see right in the Bill.com system that each invoice was approved.
2. For organizations with a smaller number of invoices, you could simply have an email thread of documentation approving each invoice. There are a number of different review templates available to document the reviewer’s name, date, and items reviewed that could be part of the electronic review process documentation. The key with an email review of invoices is to ensure that the documentation is attached or approved within the email thread and very easy to track down the invoice that was approved within each email thread. You could also store this information on the network drive for your organization.
3. If you’re an organization with a small segregation of duties, consider whether now is the right time to outsource payroll. Payroll is generally the largest expense of an organization, so by outsourcing the payroll, the organization is able to have an increased focus on the monitoring and reviewing of payroll reports with less of a risk in preparing the payroll. The organization could have one person in contact with the payroll company to communicate total number of hours for each person and a separate person who communicates authorized wages to the payroll company.
4. Involve more members of the Board of Directors who are separate of the disbursem*nt process to assist in reviewing checks written, the bank statement, the bank reconciliation, and the payroll reports to assist in the monitoring process. It is very important that reviews are still taking place during this ‘new normal’ and being documented.

We hope that some of these recommendations are useful for your organization and you can easily implement. If your organization has questions related to this ‘new normal’ of internal controls, our Wegner team is ready to assist you.

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