Internal controls related to cash
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What are some internal controls related to cash? Why is control over cash important? What are the pros and cons of segregation of duties over cash? Why is a bank reconciliation considered an internal control over cash? How does it provide control? What control violations might the bank reconciliation highlight?
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Solution Summary
Internal controls related to cash are discussed. The pros and cons of segregation of duties over cash are examined. The solution looks at the control violations which the bank might reconcile.
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What are some internal controls related to cash? Why is control over cash important? What are the pros and cons of segregation of duties over cash? Why is a bank reconciliation considered an internal control over cash? How does it provide control? What control violations might the bank reconciliation highlight?
What are some internal controls related to cash?
Internal controls related to cash:
1. There should be segregation of duties as the person who is actually taking care of cash under lock and key should not be allowed to enter the cash transactions in the system.
2. The person who is handling cash should be different from the person who is generating sales invoices and purchase orders.
3. Cash payment voucher should be made by one person, checked by another person with regard to accuracy and the eligibility for making the payment and the cash voucher should be authorized by the authorized persons. Authorized persons can be department head of the concerned department who makes purchase. In case of checks, it should be signed by person(s) to sign the checks. In case of payments involving high amount, the check should be signed by the specific authorized person. It should be ensured that number of authorized persons is minimum practical number (generally two persons should sign the check)
4. ...
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