Build Trust But Building Process Is More Important!
Many Business Owners like to trust only a few people in the company when running their companies, and neglected building a strong process of Internal Controls, this may be the beginning of their down fall!
Building trust in your People is important, but people are humans, and most of the time human beings can not resist temptations of Greed and Lust.
Start building a sustainable and long lasting Process in your company, following some examples below :
1) Division of Duties
The Person Preparing the Document should not be the same Person Reviewing it, and the Person Authorizing the Transaction should not be the same person who reviewed the Document. Division of Duties makes Collusion more difficult.
2. Authorization Matrix
Have an Internal written Policy on who and who should be authorizing different types of corporate expenditures. These expenditures can be
– Routine Purchases
– Ad Hoc Purchases
– Capital Expenditures
– Hiring of New Staff
– Recruitment / Headhunting Fees
– Lawyer / Consultant / Professional Fees
– etc
In this Policy, you may want to put in who to approve for value below say $1000, and who and who to approve when value exceeding $1000, and so on
3. Bank Panel List
Always have Joint Signatories for all company Cheques.
You can create Group A and Group B Signatories.
Group A Signatories can be those at Director level or at HQ Level, and Group B can be key Heads of Department.
Never pre-sign any cheques.
Never sign Cheques without any supporting Documentary proof, and all Documentary Proof must be Prepared, Reviewed and Approved by your Team in (1) above.
We call these Group A and B Bank Signatories – Bank Panel List.
It is very difficult for Group A and B signatories to collude.
Above are just some common examples of good Processes to be implemented for Good Corporate Governance.
Do Not Trust people too much, trust your Process, will be more sustainable. People can age and die, Process lives forever!
Good Luck!
If you need help, feel free to contact us at :
(O) +65 63851011
(M) +65 90880669
