Wealth of Wisdom

CHAPTER 56Creating Internal Controls and Policy and Procedures for a Family Office

Eugene Lipitz

Successful family offices establish procedures that protect the clients of the office, ensure focus on goals that have been agreed upon, and enforce the decision-making agreements that reinforce confidence in the family office by its members.

Each office will need to choose the frameworks appropriate for them depending on the services they deliver, the complexity of their operations, and the resources available to their offices. This framework may include a procedure manual, a set of internal controls, governance, fraud deterrence, and integrated risk management systems. Some single-family offices (SFOs) may find that, given their aspirations, some resources may need to be added to their operations in order to achieve a reasonable degree of standards.

The Committee of Sponsoring Organizations of the Treadway Commission (COSO) has developed an excellent set of frameworks and tools that are worth considering (www.coso.org).

Copedia (www.copedia.com) is also a good source of road-tested policy and procedure templates that can be customized to an SFO's needs. It is helpful to create workflow templates rather than a large book of text-only procedures because they are clearer and can be easily adapted eventually to a dynamic online system of workflows. If you already have a procedure handbook, you can start creating these workflows based on that material, updating as you go to conform ...