Cannabis Accounting

Don’t just give one person the keys to your cannabis accounting

By March 17, 2021March 26th, 2021No Comments

If you’re like many entrepreneurs, you might want to outsource your entire accounting function to someone else.

That makes sense for customer invoicing, general bookkeeping, payroll, and some form of accounts payable. However, if you are a small business owner, you should make sure that you have internal controls in place to limit access to your outsourced finance team. Theft and Fraud is often an inside job, and guess who is the most likely to perpetuate the fraud? The person is responsible for accounting.

Time and time again, fraud occurs because there was an opportunity (limited controls), rationalization (the person needs some money), or pressure (financial pressure is usually the biggest one). As a business owner, there are several controls that you can put in place to help mitigate the chances of fraud. This usually includes segregating the duties of key functions and performing a diligent review on the books.

Key areas that you will want to segregate include

  • Created and Deleting Invoices
  • Performing customer write-offs in the system
  • Voiding Invoices
  • Receiving customer deposits
  • Performing the bank reconciliation
  • Creating new vendors
  • Paying Vendors (without authorization)
  • Writing Checks (without authorization)
  • Ability to create journal entries without approval or review

If you’ve got a limited team, my guess is that you will not be able to segregate all of these duties. If that’s the case, you will want to determine what areas you can help segregate through a review or an approval.

You can create weekly and monthly internal controls to help mitigate the risk of fraud. This can include a review of bank reconciliation, a detailed review of the sales reports and AR, a review of the journal entries made during the period, and a comparison between the budget and actual.

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