Risk Types
Finance and Accounting
Abstract
Finance and Accounting risk refers to the potential for errors or discrepancies in financial management, bookkeeping, and reporting. Operating in the web3 space, Endaoment utilizes blockchain technology as the single source of truth, comparing all financial measurements with onchain data to ensure accuracy and integrity. Effective management of these risks is essential for maintaining financial transparency, ensuring regulatory compliance, and upholding the trust of our stakeholders and donors.Policy Statement
Endaoment is committed to maintaining proper financial and accounting management practices, providing accurate financial data to users and stakeholders. We utilize blockchain technology as the definitive source of truth for all financial activities and balances, regularly verifying its validity and alignment with our internal offchain data. Compliance with this policy is mandatory for all employees, contractors, board members, and representatives acting on behalf of Endaoment.Risk Management Strategy
Risk Assessment
- Financial Data Inventory and Classification
- Maintain a comprehensive inventory of all financial data, categorizing it based on sensitivity and usage.
- Threat Analysis
- Identify and evaluate potential threats to financial integrity, including cyber threats, fraud, and human error.
Risk Mitigation
- Blockchain as Source of Truth
- Utilize blockchain technology to record all financial transactions, ensuring immutability and transparency.
- Regular Data Reconciliation
- Conduct regular reconciliation of onchain and offchain financial data to identify and address discrepancies promptly.
- Access Control Measures
- Implement strict access controls to financial systems, ensuring that only authorized personnel can access sensitive financial information.
Monitoring and Reporting
- Continuous Financial Monitoring
- Employ continuous monitoring systems to oversee financial transactions and detect irregularities or unauthorized activities.
- Incident Reporting Mechanism
- Provide a secure and anonymous system for reporting suspected financial discrepancies, fraud, or other accounting irregularities.
Operational Controls
Policies and Procedures
- Documentation
- All finance and accounting policies and procedures are thoroughly documented, with both internal and external-facing components where relevant.
- Annual Review
- Conduct an annual review of policies, updating them as necessary to reflect current best practices and regulatory changes.
Financial Controls
- 3Rs Review Process
- Ensure monthly financials are confirmed through segregation of duties involving one third party, one staff member, and one board member.
- Third-Party Financial Audit
- Engage third-party auditors to perform comprehensive financial reviews, ensuring segregation of duties and balance testing.
- Redundant Record Keeping (Onchain)
- Rely on the indelible state of blockchain for redundant record keeping, ensuring data integrity and availability.
- Expert Third-Party Controller Services
- Utilize expert third-party controller services to confirm monthly financials through segregation of duties involving one third party, one staff member, and one board member.
- Expense Reporting Procedures
- Implement a documented and auditable process for recording reimbursement requests from employees. All reimbursements must be reported within 30 days of the incurred expense, and the employee submitting the expense must request approval from another member of staff.
Vendor Management
- Compliance Standards
- Implement stringent controls and regular reviews of vendor relationships to ensure compliance with Endaoment’s finance and accounting standards.
Segregation of Duties
- Role Segregation
- Ensure that critical financial procedures and systems have segregated duties to prevent any single individual from having full control over any process without oversight.
- Approval Processes
- Maintain segregated claim diligence and approval processes to uphold checks and balances.