Abdul Khaliq

Accounts Payable Internal Controls
Overview | Control | Risk Mitigated

I dedicate a full module on AP internal controls when I train individuals and corporate teams on Accounts Payable.

AP Internal Controls help ensure:
- Accuracy and Reliability
- Fraud Prevention
- Compliance
- Operational Efficiency
- Risk Management
- Trust and Credibility
- Cost Savings

Internal Controls are an integral part of finance and accounting, and everyone in finance should clearly understand internal controls, at least in their area of responsibility.

I have compiled the list of AP controls, which provides an overview of the control and the risk mitigated.

1. Segregations of Duties
SOD is a fundamental internal control principle that involves dividing key tasks and responsibilities among multiple individuals or departments.

2. Preparer – Checker Control
The Preparer-Checker Control is an internal control designed to enhance accuracy and reliability in financial processes. The two individuals involved in a transaction are the “preparer“ and the “checker.“

3. Payment Authorization
Establish a clear hierarchy for authorizing payments. Different individuals should be responsible for approving invoices and authorizing payments.

4. Vendor Verification and Approval
Vendor verification and approval are integral to the accounts payable process, ensuring organizations engage with legitimate and reputable suppliers.

5. Three-way Matching
Matching invoices with corresponding purchase orders and receiving reports (three-way match) is a critical step to ensure that the organization is billed accurately for goods or services received.

6. Accurate Coding and Classification of Expenses
This control ensures that each transaction is correctly identified, categorized, and recorded in the organization's accounting system.

7. Invoice and Payment Reconciliation
It involves comparing and verifying invoices with corresponding payments to ensure accuracy, completeness, and adherence to financial policies.

8. Duplicate Payment Prevention Control
Duplicate payments occur when the same invoice is paid more than once, leading to financial discrepancies. A Duplicate Payment Prevention control is essential for maintaining financial accuracy and preventing fraud.

9. AP Sub-Ledger and General Ledger Reconciliation
The reconciliation between the AP sub-ledger and the General Ledger is a critical internal control mechanism that ensures accuracy and consistency in financial reporting.

What else would you add?

💡 𝘛𝘩𝘪𝘴 𝘪𝘴 𝘱𝘢𝘳𝘵 𝘰𝘧 𝘵𝘩𝘦 “𝘗𝘳𝘢𝘤𝘵𝘪𝘤𝘢𝘭 𝘈𝘱𝘱𝘳𝘰𝘢𝘤𝘩 𝘵𝘰 𝘈𝘤𝘤𝘰𝘶𝘯𝘵𝘴 𝘗𝘢𝘺𝘢𝘣𝘭𝘦“ 𝘤𝘰𝘶𝘳𝘴𝘦 𝘐 𝘵𝘦𝘢𝘤𝘩 𝘵𝘰 𝘪𝘯𝘥𝘪𝘷𝘪𝘥𝘶𝘢𝘭𝘴 𝘢𝘯𝘥 𝘤𝘰𝘳𝘱𝘰𝘳𝘢𝘵𝘦 𝘵𝘦𝘢𝘮𝘴.

#MAKAlpha #TheFinanceMasterclass coming soon!
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- Follow Abdul Khaliq + 🔔 - Sharing the essence of 20+ years of journey.
- You can download all my work in PDF format by visiting my profile.

Month-End Close Checklist
Excel Template

The other day, I shared Month-End Closing Process. Now you have Month-End Close Checklist to support you with books-close further.

Most of these tasks are already automated through systems. However, we still need to understand what steps are required to close the books.

The month-end closing checklist is based on my experience. Let me know if you maintain a similar checklist.

Excel Template is available. You'll find the link in the comments.

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𝗟𝗶𝗸𝗲 👍 𝗦𝗵𝗮𝗿𝗲 🎙 𝗖𝗼𝗺𝗺𝗲𝗻𝘁 💬 𝗙𝗼𝗹𝗹𝗼𝘄 👣

The following areas of finance have been covered in the month-end closing checklist:

✅ Procurement
✅ Accounts Receivable
✅ Accounts Payable
✅ Treasury
✅ Projects
✅ Fixed Assets
✅ General Ledger

Anything else you would like to add?

#MAKAlpha #MonthEnd #Accounting #Closing
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Financial Control Internal Controls
5 Functions x 6 Controls x 6 Common Controls

Five most common financial control functions with six essential internal controls and six common internal controls applicable to all of them.

Here are the five functions:

1- Accounts Payable
2- Accounts Receivable
3- Fixed Assets
4- Treasury
5- General Ledger

Which option do you think best describes the benefits of internal controls?

A. Reduce Errors
B. Prevent Frauds
C. Mitigate Risks
D. Improve Processes

Did you find it helpful? Repost and share to help others learn.

#MAKAlpha #TheFinanceMasterclass Coming Soon!
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- Follow Abdul Khaliq + 🔔 - Sharing the essence of 20+ years of journey.
- I mentor and train finance and account professionals. DM for details.
- You can download all my work in PDF format by visiting my profile.

Accruals and Provisions

The Confusing Duo of Accounting. Let's Demystify!

Understanding the difference between accruals and provisions is fundamental for accurate accounting and financial reporting.

It is not unusual for business owners or even us accountants to confuse the two.

But it doesn't have to be that way.

Not, at least, after the information I have put together to demystify the confusion.

This is what you will find in the PDF attached:

1- The Confusion
2- The Reason for the Confusion
3- Why Understanding the Difference is Important?
4- Impact of Incorrect Classification?
5- The Concept
6- The Purpose
7- The Recognition
8- The Estimation
9- The Timing
10- The Reversal
11- The Adjustments
12- The Examples
13- The Impact on Cash Flow
14- The Accounting Treatment Process Flow

Would you still like some clarification?

Please get in touch with me to implement a robust system of accruals and provisions for your company.

#MAKAlpha #TheFinanceMasterclass
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- I'm Abdul Khaliq - Sharing 20+ years of experience.
- I provide Fractional CFO/Controller services to SMEs.
- Download my work in PDF by visiting my profile.

Accounting Transactions
The ERP System Behind the Scenes

It is important for an accounting team to understand the impact of recording a transaction in the ERP system.

Understanding of how many modules or G/L accounts are impacted with each transaction.

A lot goes behind the scenes when you record a single accounting transaction in an ERP system.

There was a time when most transactions were recorded by manually debiting or crediting the G/L account codes.

Every accountant knew their debits and credits thoroughly.

These days, we do not even get to see what transactions are taking place behind the scenes in an ERP system.

You have a screen where you enter the information, and the ERP system handles the accounting.

And that is great!

However, the issue arises when there are integration or reconciliation issues between sub-ledgers and the general ledger.

Or any other system issue where the knowledge of transactions an ERP system records becomes helpful. For instance, a partial posting of transactions in a batch.

Understanding what happens behind the scenes helps you resolve these issues.

With the help of five transactions, I have attempted to demonstrate how many modules and G/L account codes are impacted by one transaction.

You will also appreciate how the ERP systems help seamlessly enhance efficiency and performance by handling these transactions.

I have taken the following transactions as an example:

1- Procure to Pay
2- Order to Cash
3- Fixed Assets Recording
4- Commitments and Payment for Projects
5- Hire to Retire

What other transactions or modules can you add to the list?

#MAKAlpha #TheFinanceMasterclass Coming Soon!
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- Follow Abdul Khaliq + 🔔 - Sharing the essence of 20+ years of journey.
- I mentor and train finance and account professionals. DM for details.
- You can download all my work in PDF format by visiting my profile.

A Guide to the General Ledger

Everything you need to know about the General Ledger is included.

Today, the post is about the importance of the general ledger as a hub of all financial transactions and a source of management and financial reporting.

The general ledger (GL) holds a master record of all the financial transactions. It is a central repository for all financial information, critical to generating reports for analysis and decision-making.

The GL is organized using a chart of accounts (COA). I have included a few points on what to keep in mind when designing a COA.

Internal controls are also covered as they are vital to prevent errors and fraud.

Also included are the essential steps for GL's monthly closing.

I provided a few suggestions for the potential automation of GL processes. This can include things like automating journal entries and account reconciliations.

Finally, I included key guidelines to prepare the management report.

🔴 For a LIMITED TIME, the guide is available for FREE in a PDF format. Comment below if you need one.

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𝗟𝗶𝗸𝗲 👍 𝗦𝗵𝗮𝗿𝗲 🎙 𝗖𝗼𝗺𝗺𝗲𝗻𝘁 💬 𝗙𝗼𝗹𝗹𝗼𝘄 👣

Here's what I have covered:

1️⃣ Overview of the General Ledger
- GL Definition
- GL as Central Repository
- GL Summarization
- GL as Reporting Source

2️⃣ Chart of Account
- COA for Future Financial Management
- Scalability and Growth
- Financial Analysis and Reporting

3️⃣ Internal Controls
- Segregation of Duties
- Access Controls
- Authorization and Approval Procedures
- Reconciliation and Review
- Audit Trails
- Document Retention and Management
- Budgetary Controls
- Data Validation and Accuracy Checks
- Balancing the Ledger
- Sub-Ledger Reconciliation

4️⃣ GL Month-End Closing Steps
- Preparation and Planning 
- Review Subsidiary Ledgers
- Adjusting Entries
- Revenue Recognition
- Expense Recognition
- Depreciation and Amortization
- Bank Reconciliation
- Accruals
- Financial Statement Preparation
- Review and Approval 
- Documentation
- Adjusting Entries
- Aging Reports
- Post-Closing Adjustments
- Final Review

5️⃣ Automation
- Transaction Entry and Posting
- Reconciliation
- Period-End Closing

6️⃣ Management Reporting
- Executive Summary
- Business Performance Analysis
- Budget vs. Actual Analysis
- Subledger to GL to Management and Financial Reporting

Is there anything else you would like to include?

#MAKAlpha #Accounting #GeneralLedger
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65 Financial Planning & Analysis Terminologies

If you plan on switching to a new role, make sure to familiarize yourself with the specific language and terminology used in that role.

Learn > Understand > Use

➡ Learn the terminologies
➡ Thoroughly understand how they are used
➡ Ensure you use the terminologies frequently and when appropriate

If you can showcase what those terminologies mean, there's a good chance that you will be chosen for the position when it becomes available.

PDF version is available. Please comment below if you need one.

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𝗟𝗶𝗸𝗲 > 𝗦𝗵𝗮𝗿𝗲 > 𝗖𝗼𝗺𝗺𝗲𝗻𝘁 > 𝗙𝗼𝗹𝗹𝗼𝘄

Here are the 65 FP&A Terminologies covered under the following topics:

✅ Reporting Periods
✅ Gross, Operating & Net Margins
✅ Financial Ratios
✅ Investment, Sales & Equity Returns
✅ Cash Conversion
✅ Cost, Contribution & Operating Income
✅ EBIT, EBITDA & FCF
✅ Management Report Terminologies
✅ Budget & Forecast Terminologies

What else you like to see added to the list?

#MAKAlpha #Accounting #FinancialPlanningAndAnalysis #FPnA
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