Explore BrainMass

Cash Management Controls

This content was STOLEN from BrainMass.com - View the original, and get the already-completed solution here!

Please respond to the following: For Illinois

Explain three or four state and local cash management controls that are in place in your system.
Do you believe that these controls are necessary? Why or why not?

© BrainMass Inc. brainmass.com October 17, 2018, 10:54 am ad1c9bdddf

Solution Preview

1. "The investment officer will maintain a list of financial institutions authorized to provide investment services. The selection process for inclusion on this list will be detailed in the written administrative procedures for investments." - Yes, I believe this control is necessary. The state/city needs to ensure that they are doing business only with banks that meet certain guidelines. This keeps it easier for the government to meet cash management needs in an honest and ethical way.

2. The City of Peoria is empowered to invest in certain types of securities as detailed in 30 ILCS 235/2. Among the authorized investments are:
1. Non-negotiable certificates of deposit and other collateralized evidence of deposits with qualified public depositories
2. Obligations of the U.S. Government, its agencies and instrumentalities. ...

Solution Summary

The expert examines cash management controls. The four state and local cash management controls are provided.

Similar Posting

Internal Control & auditing of financial statement

1). Alternative Distributor Corp., a distributor of groceries and related products,
is headquartered in Medford, Massachusetts.

During a recent audit, Alternative Distributor Corp. was advised that existing internal
controls necessary for the company to develop reliable financial statements were inadequate.
The audit report stated that the current system of accounting for sales, receivables,
and cash receipts constituted a material weakness. Among other items, the report focused
on non-timely deposit of cash receipts, exposing Alternative Distributor to potential loss
or misappropriation, excessive past due accounts receivable due to lack of collection
efforts, disregard of advantages offered by vendors for prompt payment of invoices, absence
of appropriate segregation of duties by personnel consistent with appropriate control
objectives, inadequate procedures for applying accounting principles, lack of qualified
management personnel, lack of supervision by an outside board of directors, and overall
poor recordkeeping.

(a) Identify the principles of internal control violated by Alternative Distributor

(b) Explain why managers of various functional areas in the company should be concerned
about internal controls.

2).You are a loan officer for Lakeland Bank of Port Washington. Edmund Jeffries,
president of E. Jeffries Corporation, has just left your office. He is interested in an 8-year
loan to expand the company's operations. The borrowed funds would be used to purchase
new equipment. As evidence of the company's debt-worthiness, Jeffries provided you with
the following facts.
2007 2006
Current ratio 3.1 2.1
Asset turnover ratio 2.8 2.2
Cash debt coverage ratio .1 .2
Net income Up 32% Down 8%
Earnings per share $3.30 $2.50

Jeffries is a very insistent (some would say pushy) man. When you told him that you
would need additional information before making your decision, he acted offended, and
said, "What more could you possibly want to know?" You responded that, at a minimum,
you would need complete, audited financial statements.

(a) Explain why you would want the financial statements to be audited.

(b) Discuss the implications of the ratios provided for the lending decision you are to
make. That is, does the information paint a favorable picture? Are these ratios relevant
to the decision?

(c) List three other ratios that you would want to calculate for this company, and explain
why you would use each.

View Full Posting Details