How can you prevent future financial crises? Janet Paterson, CEO and founder of Charter Tax Consulting, Ltd. shares six procedures to prevent these crises:
» Redefining the roles. They established better-defined roles between the individuals that processed accounting entries and the individuals that produced them.
» Establishing sign-off processes. To maintain proper financial visibility, they made a rule that all accounting entries had to be signed off by two parties— the FD and another director.
» Eliminating potential problems. They completely banned the use of the suspense account, which eliminated the potential for future financial problems.
» Adopting routine audits. To side-step potential disasters, they made sure all accounts are subject to a proper audit (in this case, the company was below the audit threshold, so one was not previously undertaken).
» Increasing access to technology. The company trained non-financial directors on the accounting software, so that they would know how to use the software and drill down into peculiar transactions if needed.
» Sticking to the numbers. All of the directors agreed to create more meticulous budgets with the FD, against which any variances could be analysed in more detail.