Simple way to improve internal controls over disbursements

What could you do when there aren’t enough staff to have someone other than the bookkeeper prepare the bank reconciliation?  Bank recs are complicated.  For many small organizations, the staffing is so thin that there is no one other than the bookkeeper who has the skills to prepare them.  What to do when you just can’t split up those duties?

As an alternative you could have another person review the unopened bank statement. 

What does this accomplish?  Someone other than the bookkeeper could read through the statement keeping an eye out for unusual or unexpected items, then look at the checks for signer, the payee, the amount paid, and the endorsement (which shows who really received the money).

Who could do this?  Perhaps the board treasurer, astute board member, or manager from another department.  In a church, perhaps the chair of the board of elders or even an astute business person with a few minutes to spare who is well-informed on church programs could perform the review.

What is the value of a separate review of the bank statements?  Most transactions of a small ministry or local church are routine expenses.  After a few months, the reviewer would have a good feel for the typical transactions.  A person familiar with the organization’s activities would quickly recognize any unusual or out-of-the-ordinary entries.  

How much time would this take?  Within probably ten minutes or less, an informed person could make sure there were no unusual transactions during the month.

Other implementation ideas.  The best approach is to have the statement mailed directly to the home of the reviewer. The second-best approach is to have the statement mailed to the ministry or church and have the person handling the incoming mail route the statement to the reviewer.  After finishing, the reviewer should initial and date the statement to document that the review has been performed.

While this procedure is not quite as good as the reviewer actually doing the bank reconciliation, it captures most of that value and is a simple, quick way to step up the internal controls over disbursements.

See the above comment for a sad illustration of when this could have been valuable.

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