The stay-at-home order amidst the COVID-19 pandemic unexpectedly launched the world’s largest remote-working experiment. Over the past weeks, we have seen organizations, including our clients and our own firm, spring into action to adapt to running either a partial or a completely remote operation. GHJ has been fielding questions in the process as our clients put new policies and procedures in place to minimize the disruption.
We are delighted to see that internal controls remain top of mind as finance departments design those new policies and procedures. Below we have summarized a list of frequently asked questions surrounding the approval of cash disbursements and cash receipts in a remote-working environment:
Q: What would be an acceptable alternative to wet signatures as evidence of approval for audit purposes?
A: It depends on what you are approving:
- For contracts with third parties, an electronic signature via DocuSign or Adobe are good options to consider.
- For internal approvals, such as those for check requests or timesheets, email records from the approvers or supervisors are sufficient.
Q: Our vendor/grantee requested that we mail the check to an alternative address, such as one of their employees’ residences, can we accommodate that?
A: Strongly discouraged. Consider the alternative of making payments via ACH or wire transfer, where the set up should have one person initiate and another person approve.
If you must accommodate the request for some reason, make sure this request comes from the appropriate person in the payee’s organization and that the request is submitted in writing. In addition, you should follow up with a phone call to rule out cyber-crime.
Lastly, you may want to consider instituting positive pay with your own bank as a compensating control. Positive pay is an automated fraud detection tool offered by most banks. In its simplest form, it is a service that matches the account number, check number and dollar amount of each check presented for payment against a list of checks previously authorized and issued by an organization.
We have also seen more clients use Bill.com. It is a cloud-based tool that enables the automation of payables and allows payments via ACH or wire transfer. Workflows and approval rules can be set up in advance, and review and approval can be made from any device, even a mobile phone. It is compatible with many accounting systems, such as QuickBooks, Xero and Oracle Netsuite.
Q: In order to process our own cash receipts, we are considering utilizing USPS’s mail forwarding services to temporarily route mail to our accounts receivable clerk’s residence. Is that acceptable?
A: We would suggest that mail be temporarily routed to another member of the accounting department without responsibility for accounts receivable. It is important to maintain segregation of duties between the physical custody of checks and the record-keeping of accounts receivable.
Other alternatives to consider are:
- Requiring customers to make payments electronically
- Working with your bank to set up a lock-box
We encourage you to reach out to our COVID-19 Resource Team if you have any questions specific to your organization.