June 2017 - page 2

Over the past two days, we’ve discussed the concept of division of duties (also called segregation of duties) as a component of internal controls over labor costs. We discussed the importance of the division of duties between those who review and approve employee time charges and those who prepare the payroll. We discussed the importance of the division of duties between those who review and approve employee time charges and those who are responsible for meeting budgets. The basic premise for internal controls is to reduce the chance that irregularities will occur. If you’re a regular reader of this blog, you know that we comment on the results of fraud investigations quite often. And one thing that many of these fraud cases have in common is that the companies (or the Government organization) either lacked basic internal control systems, had internal controls in name only (they were not in compliance with the controls they had established), were ineffective for what they were intended to accomplish, or were easily circumvented.

Source: PNWC’s Government Contracting Update: The Importance of Internal Controls Over Labor Costs

Internal Controls are a critical component of nearly every financial transaction, practice, or procedure. Yesterday we discussed a control regarding the division of duties between those who have responsibility for meeting budgets and those responsible for approving time and attendance records (see Division of Duties – Responsibility for Meeting Budgets and Approving Employee Time Charges). Today we want to discuss another internal control related to labor costs – creating a division of duties between those approving time and attendance records and those responsible for the preparation and distribution of payroll.

Source: PNWC’s Government Contracting Update: Division of Duties – Payroll Preparation and Approving Employee Time Charges