There are four key cycles (or systems) that work together to drive financial reporting in almost every business. Every transaction that occurs happens within one of these four cycles:
- Sales, Other Income and Receipts
- Purchases and Payments
- General Journals
Ensuring that your business integrates adequate controls into each of these systems is crucial to financial reporting.
Before considering specific controls, it is important to consider the culture in which they operate. Your culture may profoundly impact how effectively controls will work in your business:
- Have you set the right tone at the top?
- Does the business culture encourage integrity and accountability?