Checks And Balances

What are 'Checks And Balances'

Checks and balances are the various procedures set in place to reduce mistakes or improper behavior. Checks and balances usually ensure that no one person or department has absolute control over decisions, and clearly defines the assigned duties. The existence of checks and balances within an organization prevents any one person or department from having too much power, and forces cooperation in completing tasks.

BREAKING DOWN 'Checks And Balances'

Checks and balances are important, especially in businesses where one individual can make decisions that affect company operations. That said, checks and balances can cost more money and decrease efficiency, so a balance needs to be found. By separating the duties of various employees into clearly defined roles, businesses are better able to ensure that rogue employees or executives cannot bring down a business without other employees noticing. The term is also common in the context of government.

RELATED TERMS
  1. Negative Float

    The period of time between when a bank customer writes a check ...
  2. Check

    A written, dated and signed instrument that contains an unconditional ...
  3. Average Balance

    The balance on a loan or depositary account. A simple average ...
  4. Account Balance

    1. The amount of money in a financial repository, such as a checking ...
  5. Rubber Check

    Another name for a "bounced check." A rubber check is a slang ...
  6. Crossed Check

    Any check that is crossed with two parallel lines, either across ...
Related Articles
  1. Personal Finance

    Top 5 Reasons Banks Won't Cash Your Check

    Learn the top reasons that a bank won't cash your check, and find out what steps you can take to prevent those scenarios from happening.
  2. Trading

    Banking: Managing Your Checking Account

    By Amy FontinelleBecause your checking account is the nexus of all your banking activity - the main place that your money flows in and out of - you'll need to do a few things to keep an eye on ...
  3. Personal Finance

    What is a Bounced Check?

    Bounced check is a slang term to describe a check that cannot be processed because its writer has insufficient funds.
  4. Investing

    What are the fiduciary responsibilities of board members?

    Find out what fiduciary duties a board of directors owes to the company and its shareholders, including the duties of care, good faith and loyalty.
  5. Personal Finance

    What is an Account Balance?

    An account balance represents the total amount of money in a financial account at any given moment.
  6. Trading

    Uncovering The Securities Firm

    Learn about the various departments of a securities firm and the professionals who make it work.
  7. Retirement

    How To Do a Background Check on Prospective Employees

    Discover why background checks can be extremely costly, tips for small businesses conducting checks on a budget and if professional checks can be avoided.
  8. Personal Finance

    Is A Premium Checking Account Worth It?

    Premium checking accounts give you free checking and other perks in return for keeping a certain balance in the bank. Is that the best use of your money?
  9. Personal Finance

    Top Premium Checking Accounts of 2015

    Which banks offer the best deals for premium checking accounts – and what do you have to do to qualify for one?
  10. Investing

    Reading The Balance Sheet

    Learn about the components of the statement of financial position and how they relate to each other.
RELATED FAQS
  1. Which is more important to a nation's economy, the balance of trade or the balance ...

    Learn how to differentiate between the balance of trade and balance of payments for international trade and why the balance ... Read Answer >>
  2. Does the balance sheet always balance?

    Yes, a balance sheet should always balance. The name "balance sheet" is based on the fact that assets will equal liabilities ... Read Answer >>
  3. Could I deposit a check I received from Edward Jones, cancelling my IRA account, ...

    I had a SIMPLE Individual Retirement Account through Edward Jones while working for M. Potteiger, Inc. I stopped working ... Read Answer >>
  4. How do you calculate payback period using Excel?

    Understand the various fees that can be assessed on a personal or business checking account, and learn methods to avoid being ... Read Answer >>
  5. How do I check the balance on my prepaid credit card?

    Check your prepaid credit card balance quickly using your phone or the Internet. Keeping track of your balance is easy and ... Read Answer >>
  6. When is a balance transfer a good idea for paying off debt?

    Learn the best situation in which to do a balance transfer, enabling you to pay off your credit card debt more quickly while ... Read Answer >>
Hot Definitions
  1. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  2. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
  3. Brexit

    The Brexit, an abbreviation of "British exit" that mirrors the term Grexit, refers to the possibility of Britain's withdrawal ...
  4. Underweight

    1. A situation where a portfolio does not hold a sufficient amount of a particular security when compared to the security's ...
  5. Russell 3000 Index

    A market capitalization weighted equity index maintained by the Russell Investment Group that seeks to be a benchmark of ...
  6. Enterprise Value (EV)

    A measure of a company's value, often used as an alternative to straightforward market capitalization. Enterprise value is ...
Trading Center