Internal controls.
WHAT THE RISKS ARE
Fraudulent transactions Internal misappropriation Software errors creating value Duplicate payouts Manual adjustments without oversight
WHY SOFTWARE ERRORS MATTER
A defect can credit accounts without corresponding receipts, and be exploited once noticed.
WHAT CONTROLS TO IMPLEMENT
Separation of duties: whoever initiates does not approve
Approval thresholds by amount Limits on manual adjustments Logging of every privileged action Independent reconciliation
WHY SEPARATION OF DUTIES MATTERS MOST
It is the single control that prevents the majority of internal loss.
WHAT TO RESTRICT TIGHTLY
Ability to create ledger entries manually Ability to change balances Ability to initiate payouts Access to production data
WHAT TO MONITOR CONTINUOUSLY
Total value in the system against total received Accounts with unexpected balances Adjustments, by operator Unusual transaction patterns from internal accounts
WHY THE FIRST ONE
A system that has created value is broken, and the check is arithmetic.
WHAT TO RUN DAILY
A balance check proving the ledger sums to zero.
WHAT TO DO WHEN IT DOES NOT
Stop, and investigate before proceeding.
