Internal financial controls in a remote work environment

This may be the first time you and other staff in the accounting, finance and investments departments are working remotely either full-time or part-time. Whether you found the transition to working remotely seamless or full of challenges, there continues to be a need to uphold a strong internal controls structure over your financial processes. Changes to internal control procedures are likely required. From an audit standpoint, we encourage you to start documenting any changes made to internal control procedures during this time period. Auditors will be required to review those changes and incorporate their review of those changes into their risk assessment process to determine if any reportable conditions existed during the year.

One of the most common and important controls involves the approval of expenditures on a regular basis. Many accounting systems now allow for expenditure approvals to be evidenced in the workflow, and as such, can likely be done remotely without any issues. For example, a vendor invoice is entered into the accounting system by clerical staff and a notification is sent to a department head for approval. The department head advances the expenditure approval in the accounting system and the approval is logged during that process. This workflow can likely be done remotely without any issues.

If there are any manual approval processes that must be completed outside of an electronic accounting system, alternative procedures will likely be needed to ensure that all expenditure and purchasing approvals are appropriately documented. Consider whether transactions can be approved as a batch and documented via an email that identifies the specific range of check numbers or other identifiers. The email can then be archived for future reference. A similar methodology can be used for timesheets that require a manual approval process.

Processes that had adequate segregation of duties in a traditional work environment need to continue to do so while working remotely or operating with fewer on-site staff. As an example, you want to avoid a situation where personnel who were once responsible for reconciling cash collections are now involved with the actual collections. Identification of additional detective controls could help compensate for these situations. For example, the responsibilities for reconciliation of cash collections could temporarily be reassigned to another person in the organization.

You may find a number of other instances where segregation of duties may be compromised, such as printing of checks, bank deposits or report preparation and review procedures. In most situations, a little creativity and involvement by additional personnel might be all that is needed to help get over these segregation of duties hurdles (or at least reduce risk to an acceptable level).