Design appropriate internal controls for:
What internal controls that you would propose over these different processes
Some of these might be physical controls
some might have to do with approvals
some might have to do with reconciliation
some of these might have to do with segregation of duties
What are the controls that you would propose for cash
- counting the money in the drawer before and after the shift...maybe someone signs off on it
- reconciling the bank account on a monthly basis...maybe its approved by someone
- who signs checks when you have to buy stuff....do two people have to sign if it is over a certain amount...if so...what is the amount?
- who approves people taking money out of petty cash
The physical control related to cash received is that the cashier receives the cash in the innermost part of the office from a widow in a secure room. No person is allowed entry into the room. Immediately on receipt of cash, the money is place in a secure cash register, a printed receipt is produced. There are placards outside the cash office that say that if money is paid to the cashier a receipt should be obtained for the payment.
Approval is required for paying cash. The officer approving the payment to the employee must endorse the payment every time. The approving officer must keep a record of the payments he has approved during the week and should send a statement to the accounts clerk for reconciliation.
Approval in the form of a payment slip is required from accounts payable for making a payment to a supplier. The approvals received are summed up by the accounts clerk and is reconciled with the statement received from accounts payable. Daily deposits or withdrawal of cash is approved by the financial controller/ accounts manager. The financial controller/ ...
This solution discusses internal controls for cash and sales in 635 words.