Test a post-crisis financial control with a safe known exception to confirm it detects the issue it was designed to catch.
Corporate Recovery Partners
01 / 06
The new checklist is always green
Suppose the business introduced an invoice-checking process after a cash crisis. Every weekly report says the check was completed, but nobody can explain what would happen if an invoice appeared twice.
A completed checklist shows activity. It does not necessarily show that the control detects the problem it was introduced to prevent. Test that distinction before treating a green report as reassurance.
Choose one specific issue, such as a duplicate invoice reference in a proposed payment list. Write down what the control should identify, who should investigate and what should happen before payment proceeds.
Avoid a vague instruction to check everything. A clear expected result makes it easier to see whether the process worked and which part needs improvement.
Create an authorised test using a copy of the working data, clearly labelled for training. Introduce a known exception and keep it away from live payment systems. Do not create a real duplicate payment to test whether someone notices.
Protect confidential information and limit access appropriately. The exercise should be small enough to understand and safe enough that a mistake cannot become an actual financial transaction.
Check whether the reviewer finds the exception, records it and routes it to the correct person. A warning that nobody acts on leaves a gap even when the detection step succeeds.
business.gov.au's record-keeping guidance covers retaining accurate business records and organising them for use. Keep a short record of the test, its result and the process change agreed in response.
If the exception is missed, examine the instructions, available information and time allowed. The checker may have been asked to confirm a total without being given the invoice references needed to find duplicates.
Repeat the safe test after the change. Record what improved and what remains unresolved rather than replacing a failed result with a retrospective tick.
At the next recovery review, select a control linked to the problem that previously hurt the business. Define a safe exception and nominate someone to observe the response.
Use the outcome to strengthen the process. This practical exercise does not replace professional audit or advice, but it gives management better evidence than a checklist that has never been challenged.
