Internal Control of Cash
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ScribdTranslationsInternal Control of Cash
Uploaded by
ScribdTranslationsINTERNAL CONTROL OF CASH
The internal control of cash consists of a series of established procedures with the
to monitor most or all employee activities with the company or vice versa,
this with the aim of not affecting cash management. Its main objective is to safeguard
the company's finances and assets, ensuring the transparency, integrity, and accuracy of its
accounts and records through:
Division of labor
Delegation of authority
Assignment of responsibilities
Promotion ofpersonalefficient
Identification of the staff with thepoliciesfrom the Company.
In general, there are three basic principles to be observed in order to achieve cash control.
to know
Make ALL payments, above a certain amount, using authorized checks,
reviewed and signed by different people.
Avoid too frequent handling and access by many people to cash.
3. That the same people should never be the ones who receive money or make payments.
make the entries in the Accounting books.
4. That the person handling the 'Cash'; whether they collect or pay, does NOT have access to
the accounting records of the same.
5. Divide the work among several people so that any issue can be discovered in time.
error, omission, or fraud; and that, to commit the latter, there must be collusion among several
persons.
6. That all money coming into the company be fully deposited into its account.
banking.
THE CASH COUNT
It is a physical inspection of the cash, through which a recount of ALL the money is made,
in coins, banknotes, and checks; as well as the vouchers and receipts in the cashier's possession. Then it
compare the total with the balance indicated by the accounting books.
INTERNAL CASH CONTROL
It is the capital that the company uses for theexpensesminors within the same that do not require use
of acheck.
Internal control
In order for the resources allocated to the petty cash to fulfill their function adequately, it is necessary that
the appropriate internal control is established. To do this, it is essential to implement the following
norms
A fixed fund will be established with which the petty cash operates.
The person responsible for the proper management of that fund will be appointed.
The employee should not have access to the accounting records.
3) The check issued for the creation of the fund and those that are subsequently made for
replace it increase it, it must be done in the name of the custodian of said fund.
4) The maximum amount that can be paid through this box will be established.
Any payment made from petty cash must be supported by its respective receipt.
represented by pre-numbered receipts where the reason for the disbursement, amount,
authorization and the name and signature of the person who received it. This receipt must be supported, in the
cases that proceed, for the invoice issued by the beneficiary of the payment.
Surprise audits will be conducted as frequently as necessary to verify the
physical existence of cash or of the receipts that justify its absence.
INTERNAL CONTROL OF BANKS
They must to reconcile the operations of the accounts countable of
cash in bank, daily against the account statements issued by the agency
banking, providing evidence of such reconciliation at the end of each month.
The people responsible for issuing and signing the checks should not be the same as those who...
They are in charge of reconciling the cash deposited in the bank.
The operations of all bank accounts must be reconciled.
Cashiers should not have blank checkbooks in their possession.
The opening of bank accounts must be authorized by the board of directors.
Bank reconciliations must be prepared periodically (at least once a
With this, any irregularity essential for internal control can be detected.
INTERNAL INVENTORY CONTROL
There are severalmethodsto carry out the management and control of inventories, which are:
1. FIFO method: type ofinventoryperpetual that is detailed through the Control Card
of inventory, the outflows and inflows of the goods. It establishes that the first merchandise
What is bought is the first to be sold or to go out.
2. LIFO Method: type of perpetual inventory that establishes that the last goods that are
Buying are the ones that are sold or go out first.
Among the measures ofinternal controlwe have:
Perform physical counts periodically.
Confront the physical inventories with the accounting records.
Protect the inventories in a covered warehouse with doors in such a way that they are avoided
robots.
Deliver goods only with authorized requisitions.
Protect inventories with a policy ofsure.
Make random checks to compare with the accounting books
Minimum Quantity: It is important to determine the minimum stock quantity of u
article to be able to regularly serve the orders made by the customers.
Maximum Quantity: The maximum quantity will be the one that does not interfere with the space of the
warehouse, without harming the composition of working capital with its investment, can
support the good progress of the company.
Purchase Request: The person in charge of maintaining the records that control the
inventories, upon noticing that an item is reaching the minimum stock limit,
It will cover a purchase request and will be sent to the Warehouse Manager. He will return it to you.
duly signed copy for your corresponding file and will verify the physical quantity
of real existence, which will be noted in the purchase request. In this way, we will check
if the accounting records match the actual existence.
Goods receipt: The warehouse manager must know the approximate date when
The orders will arrive with the aim of having space availability for their
storage. Upon arrival of the goods, they will be transferred, counted, or measured, as the case may be, and
I will pass the goods receipt report to the purchasing department.
INTERNAL CONTROL OF ACCOUNTS RECEIVABLE
The total of the individual accounts must be periodically reconciled with the control account.
in the major general, with the aim of verifying the arithmetic connection.
The aging of the balances must be reviewed periodically by an Employee.
3. The account statements must be sent regularly to all debtors.
Periodic reviews of the documents must be carried out to reconcile them with the books.
countable
Specific approval from the official must be obtained for:
Grant special discounts
2. Pay creditor balances
INTERNAL CONTROL OF ADVANCED PAYMENTS
Adequate internal control requires periodic review of the elements to determine that
are in use and that the declared amount is correct, that the unamortized amounts
remain as deferred expenses.
Objectives of internal control for prepaid expenses.
1. That prepaid expenses represent benefits or services to be received or
used in the upcoming reporting periods, for which an obligation has been incurred or
disbursed funds.
2. All transactions or balances of prepaid expenses are adequately
fully accounted for in the corresponding records.
3. All transactions corresponding to the account of prepaid expenses are
registered or attributed to the appropriate period.
4. The amounts in this account are properly calculated according to the nature and the
transaction terms and accounting standards.
5. What do all the facts and circumstances that affect its valuation according to the standards reflect?
countable.
6. The accounts have been appropriately summarized, classified, and described, and they have been presented.
all the necessary aspects for an adequate understanding of these balances and transactions that
they affect the account.
Depending on the importance of prepayments, a good internal control system must
establish the need for disbursements for these concepts to be authorized by employees
by the company or by the Board of Directors.