1. Why should responsibilities for certain duties, like cash handling and cash recording, be separated? What types of responsibilities should be separated?
2. Define cash and indicate the types of items that should be reported as cash.
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1. Certain duties within a firm, including cash handling and cash recording should be separated and the two tasks given to different employees because of the possibility of fraud to be committed. For example, imagine that Sara works in the accounting office of a firm. Each morning, she is in charge of counting the cash receipts from the previous day and then recording these amounts. If she decides to steal, it would be relatively easy for her to do so. She could simply put $200 in her pocket and fail to record it. If these tasks were divided between two employees, having one count the cash and one record ...
The solution describes why there should be a separation of duties relevant to cash handling and defines cash.