What are the ten commandments of Internal Control?

1. Separate accounting functions whenever possible.
2. Consider oversight of the financial functions an important Board responsibility.
3. Receive and review financial statements at least quarterly.  Question items that significantly differ from the budget. Record your findings in the Board meeting minutes.
4. Review bank statements and reconciliations on ALL bank accounts at least quarterly. Consider getting a separate copy of bank statement with copies of cancelled checks sent to a second person.
5. Document the receipt process of “per use” and other income that is not routine . Implement appropriate controls. Consider random verification.
6. Insist that invoices, or other types of verification of the expense, is necessary before paying a bill. Check requests not adequate. If it is in-store charge or credit card, someone other than the person making the charge must review and approve.  
7. Require two board signers on reserve withdrawals. Do not allow telephone withdrawals of reserve funds.
8. Update signature cards in a timely manner whenever there is a change in board members or change in management personnel. The board may want to consider having a board member deliver/mail the signature cards to the bank.
9. Require approval of write-offs of A/R balances over a certain amount by the board.
10. ALWAYS keep an attitude of skepticism. Never say “fraud couldn’t happen in my association” or “That person would NEVER do that!” Have controls in place so that someone is less tempted to use Association monies.