Financial Oversight Checklist for Business Owners & Non-Profit Treasurers

July 2011

Many business owners are too focused on operating their business, making sales and supervising their employees to keep a close eye on financial reporting. However, even if your financial record keeping is delegated to competent personnel or a bookkeeping firm, it is essential that you take a few steps to avoid financial losses from errors or theft. The following procedures will significantly reduce your risks, and also help you stay current on the state of your finances to avoid unexpected consequences.

1. 1. Receive unopened bank statement.
   2. Review statement for unusual or unidentified transactions.
   3. Review all cancelled cheques for authorized signatures.
   4. Is the bank balance positive? If not, investigate why.
   5. Initial the bank statement.
2. 1. Receive bank reconciliation, bank statement and balance sheet for the prior month-end from the bookkeeper.
   2. Compare ending bank balance on the bank statement to the bank rec.
   3. Compare bank balance on the balance sheet to the ending balance on the bank rec.
   4. Review all outstanding cheques and deposits listed on the bank rec. and determine that they are recent and reasonable.
   5. Check the mathematical accuracy of the bank reconciliation.
   6. Initial the bank reconciliation.
3. 1. Receive a recent aged listing of accounts receivable from the bookkeeper.
   2. Are all amounts current; for those overdue, are any deserving of follow-up?
   3. Provide a list of overdue accounts for follow-up to the bookkeeper and retain a copy for yourself to compare to next month’s list.
4. 1. Obtain a current aged listing of accounts payable. Ensure all suppliers and amounts look reasonable.
   2. Are any balances overdue? Why?
5. 1. Obtain a balance sheet and both a monthly (or quarterly) and a year-to-date income statement, with a comparison to the prior year if available (or a budget).
   2. 1. Review all amounts on the balance sheet to ensure you understand their meaning. Obtain explanations for any figures you do not understand.
      2. Do total balances for bank (cash), accounts receivable, accounts payable, and loans look reasonable?
      3. Is the petty cash balance the same as in prior months?
   3. 1. Review the monthly and year-to-date income statement. Do the figures appear realistic and are they comparable to last year or budget, as available. Ask for explanations of significant increases or decreases.
      2. Review the income statements and ensure you understand the nature of all accounts.
      3. Does the total for wages appear reasonable?
6. Report completion of these procedures and any issues that arise to the Board.

Please also see our Internal Control Checklist for Small Business and Non-Profit Entities for more suggestions on protecting your assets.

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Blair Corkum, CPA, CA, R.F.P., CFP, CFDS, CLU, CHS holds his Chartered Professional Accountant, Chartered Accountant, Registered Financial Planner, Chartered Financial Divorce Specialist as well as several other financial planning related designations. Blair offers hourly based fee-only personal financial planning, holds no investment or insurance licenses, and receives no commissions or referral fees. This publication should not be construed as legal or investment advice. It is neither a definitive analysis of the law nor a substitute for professional advice which you should obtain before acting on information in this article. Information may change as a result of legislation or regulations issued after this article was written.©Blair Corkum