5 Accounting Controls for QuickBooks - dummies

5 Accounting Controls for QuickBooks

By Stephen L. Nelson

Here’s a quick summary of five powerful techniques for minimizing the problems that crop up when you’ve got people with varying levels of skill and trustworthiness working with your QuickBooks data:

  • Regularly compare physical inventory counts with inventory accounting records. One thing you can do, both to minimize your inventory losses and to maintain accurate accounting records, is regularly compare physical counts of your inventory with what your accounting records show. Frequently counting the most valuable and easiest-to-steal items accomplishes two things:

    • Inventory shrinkage is quickly identified.

    • The business owner can minimize inventory shrinkage by identifying the type of inventory that’s most often stolen or even when inventory is most often stolen.

  • Reconcile bank accounts. Another thing business owners should do, in my opinion, is reconcile their own bank accounts. Often, employee theft by accounting personnel occurs as employees figure out how to write checks on the company’s bank account that the owner doesn’t see. One sure way to find a fictitious and fraudulent transaction is to have the owner reconcile the bank statement. Additionally, any flaky, suspicious transactions tend to become obvious when the business owner looks closely at checks.

  • Segregate accounting from physical custody where possible. In a small business, it’s not always easy to separate the accounting for some activity from the physical custody or physical responsibility for that activity. For example, it’s tough to segregate the inventory accounting from physical custody or access to that inventory. A store clerk, for example, may be able to steal cigarettes easily and also adjust inventory records through cash-register sales for cigarettes. Nevertheless, wherever you can segregate physical custody from accounting, built-in error checking occurs. The person doing the accounting indirectly checks on the physical custodians’ caretaking of the asset.

  • Train employees in the use of QuickBooks. You should train employees to use QuickBooks if you have a business of any size, for two basic reasons: Someone who knows how to use QuickBooks is less likely to make inadvertent errors, and messy accounting records camouflage employee theft.

  • Close your QuickBooks file. Here’s a final technique worth considering. Though you aren’t required to close the fiscal year in QuickBooks, you may still want to do this in order to maintain the integrity of your data. Here’s how: Choose the Edit→Preferences command, select Accounting, select the Company Preferences tab, and then click the Closing Date Set Date/Password button. When QuickBooks prompts you, specify a closing date and password. After you provide this information, QuickBooks prohibits or limits users from changing or entering transactions dated before the closing date.