HR and Accounting

Republic of the Philippines
POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

Office of the President – Internal Audit Office
PUP Main Campus Building, Sta. Mesa, Manila
RESEARCH
(Human Resource Department and Accounting
Department)
Submitted by:
Bauting, Sahara A.
Cabasal, Maicah Angelique A.
Cabigao, Roy Lemuel B.
Mariano, Angelica P.
Submitted to:
Prof. Realin Aranza
What Is a Human Resource Department?

A company's human resource department is tasked with the training and development
of its workers, who are considered some of the company's most important resources.
Also known as human resources (HR), the human resource department's mission is
to make sure the company's employees are adequately managed, appropriately compensated,
and effectively trained. The department is also responsible for recruiting, hiring, firing, and
administering benefits.
How Does a Human Resource Department Work?

A human resource department is involved with making sure the company has a solid
roster of employees, who are trained to fulfill their roles and compensated appropriately for doing
so.
The human resource department provides effective policies, procedures, and people-
friendly guidelines and support. Additionally, the human resource function serves to make sure
that the company's mission, vision, and values are part of the company culture.
“When people go to work, they shouldn’t have to leave their hearts at home.”
– Betty Bender
Why the Human Resource Department is Important?

The role of the human resource department has gone from the traditional ‘hire and
fire’ to an in-depth position, focusing on another aspect of the company like looking after employee
engagement.
Not every company understands or values its human resource department. Human
resources professionals are the lifeblood of the company because their job is to ensure that the
business gets the most out of its employees. In other words, the human resource department
needs to provide a high return on the business’s investment in its people.
Common Mistakes of Human Resource Department (In companies)
1. A lack of formal policies and procedures.

The root of many costly mistakes in HR is a poor definition of expectations and
guidance on how to handle common and uncommon workplace situations. Policies needn’t be all-
encompassing, but they should aim to provide direction on what is appropriate and what isn’t. HR
policies should address areas of possible confusion (personal cell phone use, code of conduct,
dress code, etc.), legal requirements, government laws and regulations, and consistency and fair
treatment.
2. A failure to record, display and update those policies.

The employee handbook should provide rules and guidance around employee-facing
policies, including workplace safety, disciplinary measures, whether you can bring your own
devices to work, use of social media, drug and alcohol abuse, and leave and remote work. The
Department of Labor provides a Basic Compliance Toolkit that is useful in keeping policies in line
with the latest federal guidance. The business must also be mindful of state regulations, as well
as changes in the broader external environment that might impact the workforce.
3. Poor onboarding processes.

Organizations spend a lot of time and money on recruiting talent. SHRM says it takes
42 days on average to fill an open position. After compensation, an organization’s biggest HR-
related line item is often recruiting. And once employees are hired, companies often don’t have
great onboarding processes to bring them up to speed.
Onboarding is typically used to introduce new hires to a company’s culture and
policies, making sure they have the right equipment to complete the job (computer, workstation,
etc.) and enabling access to self-service tools that allow them to enroll in benefits. Top-performing
companies map onboarding to strategic activities that can better welcome employees into the
company and enhance its culture. These include peer mentoring, assessment of future training
needs, access to training resources, and setting up meetings with other teams and stakeholders.
4. Poor retention planning.

Getting high-performing people on board is important but keeping them is even more
so—the average cost of losing a good hire is $29,600. The best companies go beyond the annual
employee engagement survey to figure out what really motivates employees and instead create
individual experiences tailored to those motivations.
Research from management consulting company McKinsey & Company shows that
the top 10 employee needs and experience factors right now are job security, financial stability,
work/life balance, being treated fairly, working with people they can trust, physical and mental
health, achieving work goals, being rewarded, having supportive coworkers, and being
recognized for work. Initiatives that lead to improvement in these areas increased productivity,
engagement, and employee well-being.
5. Bad hires.
While keeping good people is crucial, hiring the wrong people can cost businesses an
average of $14,900, CareerBuilder says, and it’s a mistake nearly three in four employers say
they’ve made. Bad hires affect productivity, waste recruiting resources, increase the time it takes
to find and train another worker and compromise the quality of work. To lower the chances of this
happening, make sure the right people interview the candidate—from colleagues to the manager
to executives if it makes sense—and always check references. Consider their general attitude
and ability to learn quickly and lean on the HR team for advice.
6. Poor job descriptions.

One cause for making the wrong hire—and for employee turnover, as well—is that the
job the person accepted isn’t the one that was offered. Lots of misalignment and
miscommunication can happen between recruiting, the hiring manager, and the people whom the
new hire will be closely working with. The day-to-day duties of the job may not map to the person’s
skills, or the expectations laid out in the hiring process. Ensure all the right people review the job
posting and agree on the role before it’s published.
7. Not documenting performance issues.

Documenting performance issues not only helps employees make improvements in
their day-to-day duties but is critical in the case of litigation. Documentation should include the
employer’s expectation, how the employee failed to meet it, prior counseling or discipline,
expectations going forward, and the consequences of failing to meet those expectations.
8. Incomplete or missing employee records.

Equal Employment Opportunity Commission (EEOC) data shows that retaliation
continues to be the charge most frequently filed with the agency, followed by disability, race, and
sex discrimination. If an employee brings a claim of retaliation against the company, the business
will need documentation showing that it was a legitimate business decision to rebut the claim. So,
make sure you’re keeping track of documents like performance improvement plans, written
records of disciplinary action, and violations of company policy and can easily find them.
9. Compliance lapses and potential litigation.

Keeping up with changing regulations and laws, particularly at the state level, is a big
driver of litigation. Its research showed that some states have a far higher instance of the charge
activity than the national average, with state laws driving an increase in charge activity. HR teams
need to stay on top of laws that affect their organizations and communicate any key changes to
managers and employees. If there is an accusation, immediately start an investigation and
interview the relevant parties.
10. Insufficient training.

Training is crucial to employee retention strategies because it provides standout
employees with paths to advance their careers and lengthen their tenure with the company.
Training around new regulations and expectations of the workforce is also crucial in preventing
the type of behavior that could lead to litigation.
11. Unsecured data.

Organizations, especially midsize companies, face huge risks from data theft and
breaches. Like the failure to create a culture that embraces diversity and inclusion, the risk
extends beyond concrete costs to brand reputation issues. Stolen or compromised employee
accounts and credentials, in which attackers use previously exposed emails and passwords, are
among the most common causes of a malicious breach for companies. Train employees on best
practices for data security and strengthen requirements for passwords and how frequently they
must be updated to reduce the chances of a successful attack.
Conducting Human Resource Audits

Overview
Human resource audits can help identify whether an HR department's specific practice
areas or processes are adequate, legal, and effective. The results obtained from this review can
help identify gaps in HR practices, and HR can then prioritize these gaps to minimize lawsuits or
regulatory violations, as well as to achieve and maintain world-class competitiveness in key HR
practice areas.
Background
Human resource audits are a vital means of avoiding legal and regulatory liability that
may arise from an organization's HR policies and practices. In addition to identifying areas of legal
risk, audits are often designed to provide a company with information about the competitiveness
of its HR strategies by looking at the best practices of other employers in its industry. In essence,
an HR audit involves identifying issues and finding solutions to problems before they become
unmanageable. It is an opportunity to assess what an organization is doing right, as well as how
things might be done differently, more efficiently, or at a reduced cost.
In today's competitive climate, organizations operate within the confines of a heavily regulated
employee environment. This challenge includes dealing with myriad complex laws and
regulations. The scope of the HR function includes establishing and administering a host of
policies and practices—many of which involve compliance implications—that significantly
influence the productivity and profitability of the enterprise.
Given that many HR departments are both understaffed and overworked, only in retrospect do
many organizations become aware of the monetary costs of ignoring HR-related legal hot buttons.
Noncompliance with applicable laws and regulations involves significant financial risk. To
minimize the risk, many organizations purchase employment practices liability insurance. Though
this is a sound strategy, organizations can take other proactive measures. Chief among these is
a voluntary HR compliance audit.
An HR compliance audit generally consists of two main parts:

An evaluation of the organization's operational HR policies, practices, and processes
with a focus on key HR department delivery areas (e.g., recruiting—both internal and external,
employee retention, compensation, employee benefits, performance management, employee
relations, training and development).
A review of current HR indicators (e.g., number of unfilled positions, the time it takes
to fill a new position, turnover, employee satisfaction, internal grievances filed, number of legal
complaints, absenteeism rates).
HR usually conducts an audit by using a questionnaire that asks for the evaluation of
specific practice areas. This document helps guide the audit team in scrutinizing all critical areas
of an organization's HR practices. The audit may also include interviewing or using questionnaires
to solicit feedback from selected HR employees and other department managers to learn whether
certain policies and procedures are understood, practiced and accepted.
Rationale for Conducting an HR Audit

The changing nature of HR management demands that HR professionals participate
and contribute fully to their organizations as true strategic business partners.
An audit helps an organization understand whether its HR practices help, hinder, or
have little impact on its business goals. The audit also helps quantify the results of the
department's initiatives and provides a road map for necessary changes. Audits can also help the
organization achieve and maintain world-class HR practices.
Types of Audits
An HR audit can be structured to be either comprehensive or specifically focused,

within the constraints of time, budgets, and staff. There are several types of audits, and each is
designed to accomplish different objectives. Some of the more common types are:
Compliance. Focuses on how well the organization is complying with current federal, state, and
local laws and regulations.
Best practices. Helps the organization maintain or improve competitive advantage by comparing
its practices with those of companies identified as having exceptional HR practices.
Strategic. Focuses on strengths and weaknesses of systems and processes to determine
whether they align with the HR department's and the organization's strategic plan.
Function-specific. Focuses on a specific area in the HR function (e.g., payroll, performance
management, records retention).
What to Audit
Deciding what to audit depends largely on the perceived weaknesses in the
organization's HR environment, the type of audit decided on and the available resources. Keeping
a log of issues that have arisen but are not covered in the organization's procedures or policies
helps identify areas of potential exposure that HR can address during the annual review process
(if they do not need to be addressed immediately).
However, organizations are particularly vulnerable in certain areas. Most lawsuits can
be traced to issues related to hiring, performance management, discipline or termination. Some
additional risk areas that employers should carefully review in an audit include:
Misclassification of exempt and nonexempt jobs. Almost every organization has job positions
that have been misclassified as exempt from overtime eligibility. The complexity of wage and hour
laws and regulations makes it easy to err in classifying a job as exempt, thereby exposing the
employer to liability for past overtime.
Inadequate personnel files. A review of sample personnel files often reveals inadequate
documentation of performance—for example, informal, vague or inconsistent disciplinary
warnings. Performance evaluations may be ambiguous, inaccurate or outdated. Personal health
information is often found in personnel files, despite medical privacy laws requiring such data to
be kept separate. Accurate and detailed records are essential for employers to defend any type
of employee claim, particularly unemployment compensation or wrongful termination claims.
Prohibited attendance policies. Controlling excessive absenteeism is a big concern for most
employers. However, the complexity of family and medical leave laws, with sometimes conflicting
state and federal protections, has made many formerly acceptable absence control policies
unacceptable. Absences affect workers' compensation, family and medical leave, disability
accommodations, and pregnancy laws. Organizations often have attendance policies that do not
comply with relevant laws and regulations or that grant employee more protections than required.
Inaccurate time records. Employers typically require nonexempt employees to punch a time clock
or complete timesheets reflecting their time worked each week. The records generated by these
systems typically are the employer’s primary means of defense against wage and hour claims, so
time-keeping policies and practices must be clearly communicated and consistently administered.
Form I-9 errors. Reviews of employer hiring practices often uncover inadequate documentation,
such as missing or incomplete Forms I-9. Employers can be fined between $100 and $1,000 for
each failure to accurately complete a Form I-9. Fines for these violations can easily add up, with
reported cases of repayment totaling over $100,000.
When to Audit
Given the resources required for a full-scale audit, most organizations will not want to
go through this process more than once a year; however, mini-audits that allow for some course
correction can be accomplished without too much departmental pain approximately every six
months. Scheduling annual checkups to maintain the discipline of a regular review is preferable
to only occasional or panic audits (e.g., those that take place only when a potential problem is
brewing). Another strategy is to conduct an audit following any significant event (e.g., new plans,
management changes).
What to Expect
A comprehensive audit is a time-consuming and intensely focused project that may
require the review of numerous documents and policies, as well as soliciting feedback from HR
staff, selected employees, and managers from other departments. The amount of time involved,
and the effort required depend on the size and type of organization, the type of information the
organization hopes to glean, the scope of the audit, and the number of people on the audit team.
A full-scale legal compliance audit in particular covers a great deal of territory and
takes longer to complete as compared with a best-practices audit, which benchmarks one specific
practice against another employer's approach, or a function-specific audit, which reviews only one
key area of the employer's HR practices.
Costs of an Audit
The actual cost of an HR audit depends on the scope of the review, the number of
people interviewed, and the size of the audit team. Consequently, the expense varies greatly from
one situation to another. Suffice it to say, though, that the cost of conducting any full-scale HR
compliance audit will be far less than defending (let alone losing) even one lawsuit. Some
insurance carriers even provide audits as a part of their compliance programs, so the audit could
actually be free.
Who Should Conduct an Audit

The organization's HR professionals can perform an audit in-house if they have the
expertise, the time, a willingness to objectively acknowledge inadequacies in current procedures
and, most importantly, the clout to make or influence the necessary organizational changes.
However, if the audit is conducted with internal resources or even with an outside consultant who
is not a lawyer, everything connected with the audit is subject to discovery in litigation relating to
employment practices.
If an organization has legitimate concerns about what its HR audit may reveal
regarding the company's noncompliance with various employment laws and regulations, the
organization should follow fairly strict audit procedures and protocols and consider hiring outside
legal counsel to conduct the audit. In doing so, the employer may be able to safeguard the audit
results through the application of at least one of the three legal privileges against disclosure.
The HR Audit Process: A Model

The general process of conducting an audit includes seven key steps, each of which is discussed
in greater detail below:
Determine the scope and type of audit.
Develop the audit questionnaire.
Collect the data.
Benchmark the findings.
Provide feedback about the results.
Create action plans.
Foster a climate of continuous improvement.
DETERMINE THE SCOPE AND TYPE OF THE AUDIT

To uncover the needed information, the audit team must determine exactly which areas to target
for review. If the organization has never audited its HR function, or if significant organizational or
legal changes have recently occurred, the audit team may want to conduct a comprehensive
review of all HR practice areas. On the other hand, if concerns are limited to the adequacy of a
specific process or policy, the audit team can focus its review on that particular area.
DEVELOP THE AUDIT QUESTIONNAIRE

Whether conducting a comprehensive audit or an audit of a specific practice, the audit
team should invest sufficient time in developing a comprehensive document that elicits
information on all the subjects of the inquiry. HR must develop a list of specific questions to ensure
that the questionnaire is complete.
COLLECT THE DATA

The next phase includes the actual process of reviewing specific areas to collect the
data about the organization and its HR practices. Audit team members will use the audit
questionnaire as a road map to review the specific areas identified within the scope of the audit.
BENCHMARK THE FINDINGS

To fully assess the audit findings, the team must compare them with HR benchmarks.
This comparison will offer insight into how the audit results compare against other similarly sized
firms, national standards or internal organizational data. Typical information that might be
internally benchmarked includes the organization's ratio of total employees to HR professionals,
ratio of dollars spent on HR function relative to total sales, general and administrative costs, and
the cost per new employee hired.
National standard benchmarking might include the number of days to fill a position,
average cost of annual employee benefits and absenteeism rates.
PROVIDE FEEDBACK ABOUT THE RESULTS

At the conclusion of the audit process, the audit team must summarize the data and
provide feedback to the organization's HR professionals and senior management team in the form
of findings and recommendations. Findings are typically reduced to a written report with
recommendations prioritized based on the risk level assigned to each item (e.g., high, medium
and low). From this final analysis, the audit team can develop a timeline for action that will help
determine the order in which to address the issues raised. In addition to a formal report, the audit
team should discuss the results of the audit with employees in the HR department, as well as with
the senior management team, so that everyone is aware of necessary changes and that approvals
can be obtained quickly.
CREATE ACTION PLANS

It is critical that the organization actually do something with the information identified
as a result of an audit. The organization must create action plans for implementing the changes
suggested by the audit, with the findings separated by order of importance: high, medium, and
low. Conducting an audit and then failing to act on the results actually increases legal risk.
FOSTER A CLIMATE OF CONTINUOUS IMPROVEMENT

At the conclusion of the audit, HR leaders must engage in constant observation and
continuous improvement of the organization's policies, procedures, and practices so that the
organization never ceases to keep improving. This will ensure that the company achieves and
retains its competitive advantage. One way to do this is to continuously monitor HR systems to
ensure that they are up-to-date and to have follow-up mechanisms built into every one of them.
One approach is to designate someone on staff (or an outside consultant) to monitor
legal developments to ensure that HR policies and practices are kept current. Likewise,
organizations should keep track of the audit findings and changes made, turnover, complaints
filed, hotline issues, and employee survey results to identify trends in the organization's
employment-related issues. Identifying problematic issues, growth areas, or declining problem
spots can help in the decision of where to allocate time, money, and preventive training resources
in the future.
ACCOUNTING
DEPARTMENT
Checklist for an Accounting Audit

by Chris Bradford
Audits of accounting and financial records are foundational to small business

management. Also known as a financial audit, an accounting audit is a term describing a thorough
review and examination of a company's accounting and financial records. The purpose of such
audits is to verify the reliability and accuracy of accounting records, correct any errors and test
internal controls. The methods of large corporations are also valid for small organizations. Small
businesses are vulnerable to internal theft and fraud. Auditing serves as a method to confirm an
accounting department is functioning normally and make recommendations for improvement.
Preparation
The first step in an audit is the designation of the auditor or audit team. Many small
business owners will elect to personally direct or assist the auditor selected. A business owner
may simply select someone regarded as beyond reproach from inside the organization who is
qualified to conduct an audit. Having an "insider" and someone independent provides a balance
in perspectives. The audit team must familiarize themselves with relevant policies, procedures
and internal controls.
Department Review
Confirm that accounting policies exist in writing. Business owners should conduct a self-
assessment of their management tone toward ethics and honesty. Build integrity from the top
down. Review controls that restrict access to accounting applications. Assess the duties of
accounting personnel. Verify that incompatible duties are segregated. As an example, persons
who collect cash should not also count it and prepare deposits. Evaluate hiring standards for
trusted employees and establish pre-employment background screening if not in place. Confirm
that training on policies and procedures regarding transactions is documented. Make sure a zero-
tolerance policy toward employee theft is communicated.
Source Documentation
Accounting audits will include a review of most aspects of procurement and purchasing;
shipping and receiving; inventory control; sales records; accounts receivable, accounts payable
and payroll accounts; cash accounts, and any other designated areas. Auditors are aware that a
paper trail must exist for journal entries to be valid. Purchases require purchase orders or
authorizations, delivery records, invoices, and billing statements from suppliers. This "trail" must
be preserved and available for inspection as a basis for auditors. Cash sales must have invoices,
receipts, or cash terminal records to support them. Customers purchasing on credit also should
have source documentation, records of payments on account, and any record of credit and
returns. Payroll must verify the identity of a real employee with an approved timecard prior to
payment. These examples illustrate that numbers in journals or automated accounting
applications must conform to source documents.
Testing
The audit process involves verification to confirm the validity of source documentation.
Verification is the process of reviewing invoices, billing statements and other documents such as
purchasing records to verify the document in question is genuine. Auditors typically call or contact
a sampling of vendors to verify the invoices and amounts listed on sales documents. In the same
way, auditors will contact customers to confirm the balances showing on the account or contact
customers whose balances show as overdue or written off to bad debt. It is advisable for auditors
to observe physical inventories to compare against company records.
What Are the Seven Internal Control Procedures in Accounting?
Internal controls are policies and procedures put in place to ensure the continued reliability
of accounting systems. Accuracy and reliability are paramount in the accounting world. Without
accurate accounting records, managers cannot make fully informed financial decisions, and
financial reports can contain errors. Internal control procedures in accounting can be broken into
seven categories, each designed to prevent fraud and identify errors before they become
problems.
Tip
The seven internal control procedures are separation of duties, access controls, physical audits,
standardized documentation, trial balances, periodic reconciliations, and approval authority.
Separation of Duties
Separation of duties involves splitting responsibility for bookkeeping, deposits, reporting,
and auditing. The further duties are separated, the less chance any single employee has of
committing fraudulent acts. For small businesses with only a few accounting employees, sharing
responsibilities between two or more people or requiring critical tasks to be reviewed by co-
workers can serve the same purpose.
Accounting System Access Controls

Controlling access to different parts of an accounting system via passwords, lockouts, and
electronic access logs can keep unauthorized users out of the system while providing a way to
audit the usage of the system to identify the source of errors or discrepancies. Robust access
tracking can also serve to deter attempts at fraudulent access in the first place.
Physical Audits of Assets

Physical audits include hand-counting cash and any physical assets tracked in the
accounting system, such as inventory, materials and tools. Physical counting can reveal well-
hidden discrepancies in account balances by bypassing electronic records altogether. Counting
cash in sales outlets can be done daily or even several times per day. Larger projects, such as
hand counting inventory, should be performed less frequently, perhaps on an annual or quarterly
basis.
Standardized Financial Documentation

Standardizing documents used for financial transactions, such as invoices, internal
materials requests, inventory receipts and travel expense reports, can help to maintain
consistency in record keeping over time. Using standard document formats can make it easier to
review past records when searching for the source of a discrepancy in the system. A lack of
standardization can cause items to be overlooked or misinterpreted in such a review.
Daily or Weekly Trial Balances

Using a double-entry accounting system adds reliability by ensuring that the books are
always balanced. Even so, it is still possible for errors to bring a double-entry system out of
balance at any given time. Calculating daily or weekly trial balances can provide regular insight
into the state of the system, allowing you to discover and investigate discrepancies as early as
possible.
Periodic Reconciliations in Accounting Systems

Occasional accounting reconciliations can ensure that balances in your accounting system
match up with balances in accounts held by other entities, including banks, suppliers and credit
customers. For example, a bank reconciliation involves comparing cash balances and records of
deposits and receipts between your accounting system and bank statements. Differences
between these types of complementary accounts can reveal errors or discrepancies in your own
accounts, or the errors may originate with the other entities.
Approval Authority Requirements

Requiring specific managers to authorize certain types of transactions can add a layer of
responsibility to accounting records by proving that transactions have been seen, analyzed and
approved by appropriate authorities. Requiring approval for large payments and expenses can
prevent unscrupulous employees from making large fraudulent transactions with company funds,
for example.
Framework for Internal Accounting Controls
To be effective, the framework for internal accounting controls should have a system that
includes:
• A controlled environment/li>
• Risk assessment
• Monitoring and reviewing
• Information and communication
• Control activities
• The Three Main Internal Controls
There are three main types of internal controls, these are:
Detective Internal Controls
This type of control is designed to highlight any problems within a company’s accounting
process. Detective internal controls are commonly used for things such as fraud prevention,
quality control, and legal compliance. Examples of detective controls include an inventory count,
internal audits, and surprise cash counts. Detective internal controls protect a company’s assets
by finding errors when they occur so that business owners can minimize their impact on the
company.
Preventive Internal Controls

This type of control is a proactive control designed to prevent errors and irregularities from
occurring. Preventive internal controls are usually performed on a regular basis. Some examples
of preventive controls are:
Separation of duties: splitting tasks for bookkeeping, deposits, reporting, and auditing, so there’s
less chance of employee fraud.
Controlling access: this feature prevents team members from logging into certain parts of the
accounting system unless they have a password.
Double-entry accounting: a system that adds extra reliability so that books are always balanced.
>Preventive internal controls are put in place to help with clerical accuracy, backing up data, and
preventing employee fraud. These internal controls help to avoid any problems or irregularities so
that the business processes can run smoothly.
Corrective Internal Controls
Corrective internal controls are put in place to correct any errors that were found by the
detective, internal controls. This type of internal control usually begins by detecting undesirable
outcomes and keeping the spotlight on the problem until management can solve it. If an error
occurs, then it is essential that an employee follow procedures that have been put into place to
correct the mistake. Examples of corrective internal accounting controls include physical audits
(such as hand counting money) and physically tracking assets to reveal well-hidden
discrepancies. Implementing a quality improvement team can be a great way to address ongoing
problems and to correct processes.
Other Forms of Internal Controls

There are other forms of internal accounting controls, these include:
Standardized Documentation
When accounting documents such as inventory receipts, invoices, internal materials
requests, and travel expense reports are standardized, this can help to maintain consistency in
the company’s records. Standardized document formats also make it easier to review past
records when a discrepancy has been found in the system.
Trial Balances
This internal control entails using a double-entry accounting system. Doing so increases
reliability and keeps the book balanced. Errors may still throw a double-entry system off balance.
If employees calculate daily or weekly trial balances, this will help maintain analysis of the state
of the system so that discrepancies can be discovered early.
Periodic Reconciliations
Occasional accounting reconciliations mean that account balances in the company system can
be matched up with balances in independent accounts such as credit customers, suppliers, and
banks. Any differences between these accounts will highlight errors.
Approval Authority
This internal control requires members of the management team to authorize specific
transactions. Approval authority adds a further layer of responsibility to accounting procedures
because it proves that any transactions have been analyzed and approved by the appropriate
managers.
Ways to Improve Internal Accounting Controls

There are things you can do to strengthen your internal accounting controls. Here are a
few suggestions:
Allocate Separate Accounting Responsibilities

Instead of relying on one employee or bookkeeper to handle all the accounting duties,
segregate the processes among different members of your team. For example, processing
receipts and payments can be separated. Other activities that can be separated include signing
checks, approving invoices, and reconciling accounts. Allowing a single person to handle all these
accounting processes increases the risk of errors or fraud.
Increase Oversight
Even though you have internal controls, they will not be effective enough without oversight.
If you don’t have time to do it yourself, you should allocate a trusted member of your personnel to
review statements, account reconciliations, and payment registers periodically. Look out for
unapproved expenses or raises non-existent employees, and unapproved hours. Make it a priority
to review your company’s financial data so that you can stay abreast of trends and changes in
your financial reports.
Restrict Employee Access to Financial Systems

Typically, business accounting software allows users to edit previous transactions. This
unmonitored permission opens up the potential for employees to hide fraud or theft. As a business
owner, you should restrict employee access to the company’s financial system to reduce the risk
of employees changing and deleting entries. You can also review any transaction changes in the
system to reveal any irregular activity.
Have a Third-Party Overlook Financial Statements

You can increase the safety of your assets by having a third party review your company’s
accounts. Any employees who are involved with internal accounting and aware of your third-party
review will be deterred from fraudulent practices. An independent reviewer will also be able to
identify errors and inconsistencies.
Perform a Self-evaluation of Your Internal Controls

Performing a self-evaluation can help you to highlight any areas that come up short before
problems arise and give you the opportunity to use more effective controls. The easiest process
to perform a self-evaluation is by conducting a trace of a particular transaction throughout
company records and procedures. The trace will give you a deeper understanding of your internal
controls in action, particularly those controls which are in place to detect or prevent fraud. You
will also be able to see if your internal controls have been designed effectively and are operating
as intended.
Effective internal controls for your accounting and finance should be an integral part of your
business plan. Internal controls significantly reduce the risk of loss of assets and increase the
reliability and accuracy of all your accounting and finance operations. Additionally, controls ensure
that your company’s accounting system is in accordance with applicable laws and regulations.
References
https://www.thebalancecareers.com/what-is-the-human-resource-department-1918141
https://inside.6q.io/why-the-human-resource-department-is-important/
https://www.shrm.org/resourcesandtools/tools-and-
samples/toolkits/pages/humanresourceaudits.aspx
https://signatureanalytics.com/blog/the-three-main-internal-controls-for-accounting-and-how-
they-protect-your-assets/
https://smallbusiness.chron.com/seven-internal-control-procedures-accounting-76070.html
https://yourbusiness.azcentral.com/checklist-accounting-audit-13871.html

HR and Accounting

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HR and Accounting

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Republic of the Philippines

POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

What Is a Human Resource Department?

How Does a Human Resource Department Work?

Why the Human Resource Department is Important?

Common Mistakes of Human Resource Department (In companies)

1. A lack of formal policies and procedures.

2. A failure to record, display and update those policies.

3. Poor onboarding processes.

4. Poor retention planning.

6. Poor job descriptions.

7. Not documenting performance issues.

8. Incomplete or missing employee records.

9. Compliance lapses and potential litigation.

10. Insufficient training.

11. Unsecured data.

Conducting Human Resource Audits

An HR compliance audit generally consists of two main parts:

Rationale for Conducting an HR Audit

An HR audit can be structured to be either comprehensive or specifically focused,

Who Should Conduct an Audit

The HR Audit Process: A Model

DETERMINE THE SCOPE AND TYPE OF THE AUDIT

DEVELOP THE AUDIT QUESTIONNAIRE

COLLECT THE DATA

BENCHMARK THE FINDINGS

PROVIDE FEEDBACK ABOUT THE RESULTS

CREATE ACTION PLANS

FOSTER A CLIMATE OF CONTINUOUS IMPROVEMENT

Checklist for an Accounting Audit

Audits of accounting and financial records are foundational to small business

What Are the Seven Internal Control Procedures in Accounting?

Accounting System Access Controls

Physical Audits of Assets

Standardized Financial Documentation

Daily or Weekly Trial Balances

Periodic Reconciliations in Accounting Systems

Approval Authority Requirements

Framework for Internal Accounting Controls

There are three main types of internal controls, these are:

Detective Internal Controls

Preventive Internal Controls

Corrective Internal Controls

Other Forms of Internal Controls

Ways to Improve Internal Accounting Controls

Allocate Separate Accounting Responsibilities

Restrict Employee Access to Financial Systems

Have a Third-Party Overlook Financial Statements

Perform a Self-evaluation of Your Internal Controls

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