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Internal Cash Control

In: Business and Management

Submitted By jgiammateo
Words 715
Pages 3
The weaknesses in internal control over cash disbursements at Idaho Company are; 1. Checks are not pre-numbered, 2. More than one person is authorized to issue checks, 3. Unissued checks are not locked in a safe or locked cabinet. My recommendations to improve company procedures for internal control over cash disbursements are; there should only be one specified individual such as a treasurer authorized to sign checks. There should never be two people authorized for check signing. Make sure to assign a different person to each of these tasks; 1. Approving items for payment, 2. Paying the items, 3. Recording the payment. Use pre-numbered checks and accounting for all checks, with each check supported by an approval invoice. Always store blank checks in a safe or a locked cabinet or drawer with restricted access and use a machine to print the amounts on the checks. Compare each check with the approved invoice before issuing the check and make monthly reconciliations of bank and book balances. After payment stamp each approved invoice paid. The principles of internal control are; establishment of responsibility, segregation of duties, documentation procedures, physical, mechanical, and electronic controls, independent internal verification, and other controls. Now that Guard dog company’s checks are pre-numbered and they are using the new check writer these two things fall under Documentation procedures and physical, mechanical and electronic controls. There new procedures for issuing checks fall under Establishment of Responsibility and Segregation of duties. Establishment of Responsibility works by having only designated personnel authorized to sign checks. Segregation of duties works when different individuals approve and make payments. Check signers do not record disbursements. Documentation procedures work by using pre numbered checks and account for them in sequence, each check must have an approved invoice. Physical, mechanical, and electronic controls work by storing blank checks in safes, with limited access, print check amounts by machines in indelible ink. Independent internal verification works by comparing checks to invoices, reconciling bank statements monthly. Other controls work by stamping invoices paid. Guard dog company’s recent changes involve all of the categories under Internal Control over cash disbursements. Their recent changes are a positive change for the company and things should run smooth without undue problems. The weaknesses I can detect immediately in the local church’s internal accounting control would be; there are too many people handling the money and too many people have access to the safe where the money is held. The church also does not have any bond insurance on the financial secretary. There are several improvements that I would like to see made to insure the improvement of the internal control procedures. One of those improvements would be Establishment of Responsibility; designate one person to be responsible for a given task. Each Usher should wait when turning in their collection plates until the Head Usher counts their plate. The Head Usher needs to count each individual plate and record what each Usher had on their collection plate. The financial secretary should record the cash receipts but there should be another financial employee to hold the cash. All documentation of the cash needs to be kept and all deposit slips. There should be a supervisor to count the cash receipts daily and a treasurer to compare all of the receipts to the deposit slips. All personnel who handle the cash should be bonded and required to take vacations and all cash needs to be deposited daily. Changes should occur in these areas; 1. Establishment of responsibility- Only designated personnel are authorized to handle cash receipts, 2. Segregation of duties- Different individuals receive cash, record cash receipts, and hold the cash, 3. Documentation procedures- Use cash receipts and deposit slips, 4. Physical, mechanical, and electronic controls- Store cash in safes and bank vaults, limit access to storage areas, 5. Independent internal verification- Supervisors count cash receipts daily, treasurer compares receipts to bank deposits, 6. Other controls- Bond personnel, who handle cash, require vacations and deposit all cash in the bank daily.
I believe that all of the church’s policies should be changed in all the ways stated above. In order for the church’s finances to be accurate all of their policies need to be updated. Especially the bonding of all employees that handle the money transactions.

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