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The document outlines internal controls over cash, emphasizing the importance of processes such as bank reconciliation, segregation of duties, and the voucher system to ensure effective financial management. It highlights the need for regular bank reconciliations, maintaining minimum cash balances, and prohibiting personal check encashment from petty cash. Additionally, it details various reconciling items and the significance of proper authorization for cash disbursements.

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Ashryle Salazar
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14 views1 page

FFFFF

The document outlines internal controls over cash, emphasizing the importance of processes such as bank reconciliation, segregation of duties, and the voucher system to ensure effective financial management. It highlights the need for regular bank reconciliations, maintaining minimum cash balances, and prohibiting personal check encashment from petty cash. Additionally, it details various reconciling items and the significance of proper authorization for cash disbursements.

Uploaded by

Ashryle Salazar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Internal Controls Over Cash Unpaid vouchers – filed in the order of their required

payment dates so available cash discounts aren’t missed.


Internal Control

- any action or process effected by management to


help entity achieve its objective. Bank Reconciliation
a. Reliability of financial reporting - statement that brings agreement between cash
b. Effectiveness and efficiency of operations balance per book and per bank.
c. Compliance w/rules and regulations - prepared monthly, as bank provides bank
d. Safeguarding of assets statements at the end of every month.

Examples Bank statement

1. Segregation of incompatible duties - monthly report of bank to the depositor showing:


- authorization, execution, recording and a. Beginning cash balance per bank
custody over cash should be segregated. b. Deposits made by depositor and
2. Imprest system acknowledged by the bank
- all cash receipts should be deposited intact c. Checks drawn by depositor, paid by the
and all cash disbursement made by checks bank.
3. Bank Reconciliation
Reconciling items
- should be prepared regularly, immediately
upon receipt of monthly bank statements 1. Book reconciling items
to reconcile timely differences of cash a. Credit memos
balance per book & per bank statement. b. Debit memos
4. Cash counts c. Errors
- periodic, to provide assurance that actual 2. Bank reconciling items
cash tallies w/balance per records. a. Deposit in transit
5. Minimum cash balance b. Outstanding checks
- should be maintained, esp for cash funds. c. Errors
- sufficient to defray specific business
requirements. Credit memos
6. Lockbox accounts - not representing deposits credited by the bank
- to expedite cash collections and ensure to the account of the deposited.
cash collections are deposited intact. - not yet recorded by the depositor as cash
7. Non-encashment of personal checks from petty receipts.
cash fund - increasing bank balance.
- encashment of personal checks from petty
cash fund should be prohibited to Debit memos
discourage concealment of cash shortages.
- not representing checks paid by bank which are
8. Voucher System
charged or debited by the bank to the account
- internal control over all cash
of depositor.
disbursements
- decreasing bank balance.
Voucher
Examples:
- provide for every cash disbursement to
1. NSF checks
ensure it is properly authorized, made for
- deposited but returned by bank because of
valid expenditure and property recorded.
insufficient fund.
- Check disbursement voucher (CDV)
2. Defective checks
- business document or written
- returned by bank because of technical
authorization that supports of every
defects.
disbursement made by an entity.
3. Bank service charges
- supporting documents are attached to the
voucher to form “voucher package”

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