Companies are more successful when they have a team of people working toward the same goal. However, many businesses leave an important part of operations -- the accounting and finance department -- in the hands of a single employee. It is always best not to put one person in charge of an enormously huge asset, cash!

Business owners simply don鈥檛 protect themselves enough. Many are too busy or too trusting. This trusting mindset places the company, its employees and its overall success at risk. By recognizing these risks, business owners have the enormous opportunity to create segregation of duties in their accounting departments.

As the founder and CEO of an accounting services company, I've identified the three main risks that companies face when they lack segregation of duties in accounting, as well as best practices to create and uphold a system of checks and balances to circumvent these risks.

Increased Risk Of Fraud

One of the biggest risks associated with a lack of segregation in the accounting department is an increased risk of fraud. When one person handles the majority or all of the business finances, there is no oversight to ensure that everything is accurate.

By segregating duties in an accounting department, multiple people are held responsible for the end product. The person inputting payroll isn鈥檛 the one reconciling the bank account. Furthermore, having multiple people in the department may be enough of a deterrent to keep employees from attempting fraud in the first place.

Here are a few best practices for implementing internal controls against fraud:

1. Bank reconciliations should be done by someone other than the person who is making cash deposits or withdrawals.

2. The person entering bills and preparing checks should be different than the person signing the checks. As well, use pre-numbered checks and have two check signatures required for high-dollar-value checks.

3. Have an executive team member review and sign off on payroll.

4. Review financials monthly, including a review of the cash flow forecast and the actual costs compared to the budgeted costs.

Increased Risk Of Errors

Another problem that can result from a lack of segregated duties is the increased risk of human error. With only one set of eyes on data entry, analysis and financial reporting, accidental errors may be overlooked. This can be a huge deal, particularly if incorrect reports are filed with financial institutions or government agencies.

An accounting department can lower its risk of error by following these best practices:

1. Don鈥檛 wait to hire a solid accounting team. Being a business owner will pull you in all sorts of directions, and the least of those is usually the bookkeeping function. Don鈥檛 wait until your books are a mess.

2. Delegate as much as you can. As you are growing your business, you need to stay out of the weeds. Anything that you can pass off to someone else, you should.

3. Reconcile balance sheet accounts on a monthly basis. Everything on the balance sheet should tie to a statement or schedule. If it doesn鈥檛, something is not right.

4. No matter how smart your accounting team is, human error is inevitable. If an error does happen, it鈥檚 best to put procedures in place to catch it quickly. Segregation of duties and internal controls will help prevent not only human data entry errors, but also potential fraud.

5. Always document expenses. When you are small and there aren鈥檛 as many transactions, it can be easy to keep up with things. But when five transactions become fifty, it can be impossible to remember everywhere you went, ate, drank or had meetings. All accounting departments should have a process for how transactions are processed.

Increased Risk Of Inefficiency

In order for a team to work efficiently, each person must be working in a manner that highlights their strengths. This prevents one employee from struggling to complete responsibilities he or she is not prepared for. You don't want your CFO doing bookkeeper tasks, nor should your bookkeeper try to be your CFO.

Assessing employee experience and strengths is a vital step in successfully managing your accounting department. Additionally, a month-end checklist is helpful in creating a list of who is responsible for what. When something doesn鈥檛 go as planned, or when someone doesn鈥檛 do their job, it makes it much easier to see where the problem is and greatly reduces finger pointing.

The following steps should be taken to assess the experience and strengths of your accounting department and allocate duties accordingly:

1. Sit down with each employee and gain an understanding of what they do daily, weekly and monthly. Ask them what their favorite tasks are, where they want to grow and the things they want to learn.

2. Draft a list of duties that need to be accomplished monthly. Assign someone on your team to each task along with a due date and a place to initial when the task is completed.

3. Make sure to eliminate any duplicate efforts. Although you want your team to be cross-trained, you don鈥檛 want redundancy.

4. Once you have the duties assigned accordingly, make sure each person has a clear understanding of their responsibilities. You want their skill sets to align with the work they are assigned.

5. Draft a job description for each employee. Make sure each person鈥檚 job description aligns with what they are doing. Having written job descriptions puts everything on paper and leaves less room for miscommunication of roles and responsibilities.

Companies that have just one person doing everything are at a higher risk for fraud and human error. Segregation of duties and solid internal controls can minimize your risks all around. Remember, having a cohesive accounting department or team can protect your company's finances, provide accurate information and contribute to the overall efficiency of the business.