American College Of Surgeons - Inspiring Quality: Highest Standards, Better Outcomes

Financial Controls

Chapter leaders need to emphasize the importance of ethical standards in the preparation of financial statements, as well as the proper execution of routine chapter accounting processes through strong internal controls.

  1. Authorization
    • Will ensure that proper “checks and balances” are in place so that all transactions are executed in accordance with approved roles and responsibilities.
  2. Recording
    • Will ensure all authorized transactions are properly recorded and reported in the correct time period to match revenues and expenses.
  3. Compliance
    • Will ensure that standardized and generally accepted accounting principles are applied consistently.

Authorization, Recording and Compliance

One key to proper internal control is making certain that various financial responsibilities are assigned to different individuals. This segregation of duties is intended to prevent a single individual from having both access to a specific role or transaction and the responsibility for maintaining the accountability for a specific role or transaction .To illustrate:

  1. If an individual processes vendor payments then that individual should not review and authorize that payment.
  2. If an individual processes vendor payments, then that individual should not also have the ability to add, remove and/or change vendors without written approval from a chapter officer (preferably of higher rank than the individual processing the payments).

Listed below are some general questions to consider when determining whether or not appropriate segregation of duties exist in the Chapter:

  1. Are transactions recorded and approved or reviewed by an individual who does not have unrestricted access to related assets?
  2. Are there different individuals involved in:
    • Initiating a transaction?
    • Funding the transaction?
    • Recording the transaction?
    • Reconciling and/or reporting the transaction?
    • Writing off and/or discounting the transaction?
    • Adding, changing or deleting master membership information?
  3. Are reconciliations performed and reviewed by individuals who do not have unrestricted access to cash?
  4. Are different individuals involved in:
    • Ability to impact general ledger accounts?
    • Reconciliation of those general ledger accounts?
    • Preparation of financial statements?
    • Analysis of balance sheet and/or income statements?
  5. Does the chapter have an annual independent review and formal reporting of the Chapter’s segregation of roles and responsibilities?

The checklist on the following page highlights the major responsibilities of the Chapter Officers and Administrator in the area of financial controls. Execution of these responsibilities will promote strong internal controls, improve accuracy, timeliness and completeness of financial reporting while minimizing the opportunity for fraud.

Role

Responsibilities

Council and/or Executive Council

Review of the annual budget

Review of significant expenditures, transactions and/or budget variances

Review of annual audit findings

Review of annual tax filings

Review and formal approval of all gifts, grants, engagement fees, honorariums etc.

President and/or President Elect

Review of the annual budget

Appoint Audit Committee

Conduct an annual review of Audit Committee’s findings with all Chapter officers

Conduct a quarterly review of financial results with all Chapter officers

Conduct a quarterly review of all significant expenditures, transactions and/or budget variances with all Chapter officers

President ONLY

Second signatory for all payments by check or credit card above established amount

Present all requests for gifts, grants, engagement fees, honoraria, and so forth

Secretary

Review of the annual budget

Member of Audit Committee

Participate in all Audit Committee meetings

Participate in quarterly review of financial results

Participate in quarterly review of all significant expenditures, transactions and/or budget variances

Review of all cash disbursements

Second signatory for all payments by check or credit card above established amount

Treasurer

Prepare the annual budget

Member of Audit Committee

Initiates opening and closing and/or revisions to all bank and/or investment accounts

Execute internal control procedures/checklist

Prepare and review monthly financial results

Prepare and review all Federal and State Tax forms

Present financial results at the President’s quarterly meeting

Review and approve all transactions, cash receipts and disbursements

Primary signatory for all payments by check or credit card

Review and approve all financial transactions initiated by the Chapter Secretary/Executive Secretary

Establish and control all responsibilities of the Chapter Secretary

Chapter Administrator

Responsible for administrative functions as detailed by the Treasurer, Secretary Treasurer, and the President, including primary signatory for all payments by check or credit card, as determined by the Chapter officers

To further illustrate the importance of segregating responsibilities, the following charts outline examples of how responsibilities can be separated for Accounts Payable and Receivable:

Process Controls for Accounts Payable

Duty

Responsibility

Approval

Special Notes

Frequency

Create bank accounts

Treasurer

President

 

As required

Create a vendor

Administrator or Treasurer

Treasurer—written authorization

Treasurer should review vendor info and payment terms before the first payment is processed

As received

Modify or delete vendor master data

Administrator or Treasurer

Treasurer—written authorization

Check for potential tax (W2) implications before changing or deleting

As received

Initiate purchase request

Administrator or Treasurer

Treasurer—written authorization

Recommend two signatures on all purchases greater than $2,000

As received

Receipt of goods/ invoice approval

Requestor

 

 

As received

Matching-purchase request to signed receipt

Administrator or Treasurer

 

 

As received

Prepare check

Administrator or Treasurer

Chapter Officer and/or p.o. initiator’s signature is required on the invoice

 

Per invoice

Change an invoice quantity or $ amount

Administrator or Treasurer

Treasurer—written authorization

Treasurer should request a new invoice from the vendor

As required

Invoice filing

Administrator or Treasurer

In accordance with record retention policy

 

Ongoing

Check/voucher reconciliation

Treasurer

 

Audit Committee review

Monthly

Follow up on open items

Treasurer

 

Audit Committee review

Quarterly

Review, authorize or sign checks

Treasurer & Secretary, Secretary & President or Treasurer & President

Recommend two signatures on all purchases greater than $2,000

 

Ongoing

Mail checks

Administrator or Treasurer

None

 

Ongoing

 

Process Controls for Accounts Receivable

Duty

Responsibility

Approval

Frequency

Create bank accounts

Treasurer

President

As required

Establish and maintain roster of active dues paying chapter members

Administrator or Treasurer

 

As received

Create and produce annual dues invoices

Administrator or Treasurer

Treasurer review

As received

Mail annual dues invoices

Administrator or Treasurer

 

As required

Record receivables

Administrator or Treasurer

Treasurer review

As received

Record cash receipts

Administrator or Treasurer

Treasurer review

Daily

Create bank deposits

Administrator or Treasurer

Treasurer review

Daily

Deposit cash

Administrator or Treasurer

Treasurer review

Daily

Record credit card receipts

Administrator or Treasurer

Treasurer review

Daily

Record receivables to Accounts Receivable ledger

Administrator or Treasurer

Treasurer review

Daily

Reconcile bank accounts

Treasurer

Audit Committee review

Monthly

Reconcile/review Accounts Receivable ledger

Treasurer

Audit Committee review

Monthly