Preserving Integrity

Integrity of information is key to the finance function. Peter Morley recommends some regular checks. 
 
Integrity is at the very core of the finance function. The principles of bookkeeping and double entry are founded on the principles of cross-checking and algebraic logic. An audit sign-off says more than just whether something adds up or not, it says whether it is ‘true and fair’.

• Logical checks and balances that a system can control. 
• Looking for illogical data – ie, the data adds up but it does not make business sense.
• Spotting fraudulent data.

• Personal integrity and fallibility – this is controlled by separating duties to perform the work (ie, human cross-checking). 
• Extent of real-world verification and reconciliation – for example, when was the data last cross-checked or validated to reality? Issues here can include out-of-date data (eg, wrong postal address); duplicated data; perishable, time expired, lost or damaged assets; and un-reconciled data.

• Double counting of income or expenditure. 
• Duplicate payments – eg, original invoice and copy paid.
• Openness to fraud.
• Misleading accounts as value can be held where the asset has perished.
• Wasteful and expensive administrative re-work – eg, for a bank reconciliation.
• Wrong accounts where reporting hierarchies miss out accounts or duplicate values are reported.

• Trial balance equals zero.
• Reporting hierarchies are comprehensive and complete.
• Account balance records (if held) agree with underlying transactions.
• Control accounts balance to open (unpaid) items on their subordinate sub-ledgers (eg, accounts payable).
• Bank reconc