Every public company should have a strong system of internal controls that helps achieve efficient operations and reduces the risk of fraud. Larger companies with greater resources will often have more sophisticated frameworks of internal controls than smaller ones, but the function of these controls in helping companies stay clean within the law and ethically is the same. While no system is a perfect antidote to fraud or the production of inaccurate records, here are a few tips compiled with the help of accounting experts and CFOs of local public companies that can help organizations stay out of trouble and reduce temptation. It Starts With the Tone at the Top – Through their actions, the Board, the CEO and CFO can set a tone that is completely understood throughout the organization where anything that is questionable in terms of business activities, financial reporting or ethics is not tolerated at all. This “tone” can make all the difference. Hire Wisely – An organization is only as good as its people. Incompetent or dishonest individuals can undermine any system, no matter how secure, well structured, or designed. Separate Duties – The separation of operational responsibilities from record-keeping responsibilities, for example, helps limit the chances for fraud that would require the collusion of two or more persons. In line with this philosophy, the bookkeeper should not handle cash, and all accounting functions should not be performed by the same person. Set Review and Approval Controls – Basic, inexpensive controls such as requiring two signatures on checks above a determined amount, or having bank statements sent to the CEO for review before handing them to the controller for bank reconciliation, can go a long way towards preventing fraud. Nobody Acts Alone – Everybody has to have what they are doing approved, reviewed, or signed off on. Document Everything – The greater the documentation the less risk there is that something is going to go wrong. Well documented systems are much stronger systems. Technology Matters – Technology is hugely important in documenting the transactions and retaining the documentation and is essential in providing an audit trail. Auditing Relationships – There should be a friendly, robust relationship between the Audit Committee and outside auditors. Internal auditors should report directly to the Audit Committee. Frequent Check-ups – Self assess the system frequently. Be open to change. Look at best practices and be willing to make changes to continuously improve the system.