There is always room for improvement within a successful finance department.
After being exposed to multiple finance departments in various industries and companies, I have gained an understanding about how the different functions within the finance department come together and one thing I would say is “there is ALWAYS room for improvement”.
Below we have put together some suggestions from an auditors perspective that can be performed to improve efficiency and controls.
Confirmations – Bank details changes
Often when a supplier or employee changes their bank details, it is mainly communicated through emails or just a note in the invoice and the officer in charge would update these without any confirmations. The best confirmation is to call and confirm that change.
It poses a problem when you make a payment to incorrectly ‘updated’ bank accounts and your bank or insurance providers do not cover that loss.
Review – Employee files and contracts
For older employees, the contracts and employee files are likely somewhere gathering dust and might only be used when the auditors are in. It is important that the older employee files are reviewed and any changes be noted to ensure that they are up to date.
Ensure that employee files contain:
- A signed contract between the parties involved (letter of appointment and letter of acceptance).
- TFN declaration or employee declaration.
- Superannuation forms.
- Any deduction or allowances forms.
- Any salary packaging or FBT agreements.
- Any notes about the changes in employment e.g. salary, position etc.
- Resignation letter (if applicable).
Having these documents in the employee files provides a better tracking for the payroll function rather than storing them in the pay runs. As your pay runs are already populated with lots of documents, you want to avoid putting extra forms that don’t belong there.
Offer – Flexible jobs
Depending on the business and its requirements, sometimes you don’t require multiple employees performing AR and AP roles, as they can be combined into one role: Accounts Officer.
In addition, offering part time positions can assist you in reducing your costs. We advise you to ensure that the workload is reasonable for these positions otherwise it can do more harm than good.
Answer the why
What I find useful is to always have a conversation about the “WHY” especially with new employees. Why do we do it this way? Why do we even do it? Why? Why? Why?
This is because an employee can have a better understanding of the processes in the finance function and often when you know the why, you can suggest ways for improvement. One important thing to avoid is not to answer “because it has always been this way”.
Audit – Finance function
Having an Internal Audit function is beneficial as it can offer a new perspective on the various areas of the finance function to ensure the internal controls are working accordingly and controls are in place to eliminate and reduce the risk of fraud or accounting errors. Internal Audit would also provide appropriate recommendations that could add value to your organisation and improve the overall finance function within your business.
These suggestions may appear as common sense, but you would be surprised how useful they can be in improving your finance function. Try it for yourself or contact our Audit Specialists for more information on (03) 9835 8200.