Save Your Company Thousands, Perhaps Millions with a Set of Internal Controls!
Whether you’re the owner of a small- or medium-sized company, it’s in your best interest to create an internal environment that operates with integrity and order to prevent unwanted thefts and basic employee mistakes. A significant number of small businesses fail yearly due to the lack of good business plans or they do not identify and control risks that could have been avoided. By establishing internal controls, you can increase your company’s chances of success and growth.
We’ve all read articles in the newspaper or heard reports on the nightly news regarding accounts of small businesses being robbed blind for hundreds of thousands of dollars by trusted employees who were stealing small amounts of money over a span of years. And how did they accomplish such a feat? Usually by being responsible for too many tasks without being reviewed or checked by management, such as receive invoices, write checks and make journal entries.
Internal controls consist of your company’s method(s) of reducing any potential risks that may harm its ability to operate at its intended level to meet objectives. Examples of internal controls would be (1) reconciling your bank statement, (2) reviewing bills and credit card statements before paying them, (3) dividing these responsibilities among authorized personnel, and (4) verifying transactions after they’ve been recorded and documented.
Not your grandfather’s way of settling up!
Coming up with the money to pay the IRS may never get easier, but after many years of paying taxes to the IRS by mail (and receiving refunds from the IRS in the form of Treasury checks in brown envelopes), the IRS enabled the deposit of refunds directly into your bank account several years ago. While some people prefer their refunds by paper check (for reasons tax accountants rarely understand), most people are now receiving their refund, if they have one coming, by direct deposit.
Well, the IRS has now figured out the other side of the coin, so to speak: how to pay the IRS. It has announced the start of its new web-based system, IRS Direct Pay which allows taxpayers to pay their tax bills or make estimated tax payments directly from checking or savings accounts without any fees or pre-registration.
New IRS Commissioner John Koskinen says: “IRS Direct Pay simplifies the payment process, and taxpayers can make a payment from the convenience of a home computer.”
They oversee our returns and filings, who checks up on them?
It is easy to assume that the IRS is all powerful, and operates with the goal of collecting as much money for the government as it can, with nobody looking over its shoulder.
The Internal Revenue Service is indeed a powerful part of the government, feared by many even more than the FBI, the CIA, black helicopters or even public speaking (rumored to be well ahead of death in the list of things which terrorize us). But it, too, has an “auditor,” which examines its activities.
That function is performed by the Treasury Inspector General for Tax Administration (TIGTA). The IRS is an agency within the U.S. Department of the Treasury, so the Secretary of the Treasury has ultimate responsibility for it.
The TIGTA has just delivered his semi-annual Message to Congress, during which he submitted a report covering the period of October 2, 2013 to March 31, 2014. Among many other findings, the Inspector General reports as an example that the IRS has not developed processes to address the majority of discrepancies between deductions claimed and income reported for alimony payments. In reaching this conclusion, he says that they analyzed 567,887 returns from the Tax Year 2010 and determined that the amount of deductions for alimony exceeded the amount of income reported by more than $2.3 billion dollars. (Alimony is deductible by the payer but taxable to the recipient ex-spouse.)