Making internal controls work

We conclude our overview with a brief discussion of some of the factors that can enhance the effectiveness of internal controls in place at your centre. Again, we will be going into this area in more detail in subsequent editions.
Good control factors include:
Establishment of a finance committee of the Board to spearhead planning and monitoring of financial activities and reporting. The finance committee would report to the Board and take primary responsibility for managing financial resources throughout the year.
Design of an effective organizational structure (i.e. who does what, who is responsible for what and to whom). An organizational structure with clear reporting responsibilities that take into account the culture of the organization is critical for effective financial management. A poor organizational structure with unclear reporting responsibilities will invariably result in controls being missed, misapplied or misinterpreted.
Effective assigning of responsibilities. This includes clear articulation and documentation of job descriptions. This would also include articulation and clear documentation of responsibilities of various committees of the Board and the Board itself.
Effective management controls including methods of financial planning and budgeting, reporting of actual results to the Board and follow-up of variances between budgeted and actual amounts.