Cash And Cash Controls

Cash

• Cash is not confined to only currency notes and coins

• It includes anything that have receivables by banks as an immediate deposits like cheques, traveler cheques, money orders and postal orders.
• As cash is the most liquid asset hence it is more exposed to the risk of theft. It is therefore necessary to have specific internal control over cash

Internal Control Over Cash

 Internal control over cash covers the following:

1. Segregation of duties
2. Cash receipts
3. Cash payments
4. Bank reconciliation statement
5. Petty cash fund

(1) Internal Control Segregation Of Duties includes

• Separation in handling of cash from cash recording
• Separation of payment approval task from signing of cheques
• Separation of bank reconciliation from cash management

(2) Internal Control Over Cash Receipts includes

· Preparation of control listing for all cash received by post plus over the counter

· Use of the cash register at the cash sales counter

· Use of safety box to keep the money before depositing in the bank

• Use of receipts with pre-printed serial numbers
• To deposit ALL cash received in the bank

(3) Internal control over Cash Payments includes

• To make all payments by cheque
• To approve all payments through a disbursement voucher before the issuance of a cheque
• The use of the voucher system

(4) Bank Reconciliation

· Periodically reconcile any difference between balance per Cash Book and balance per bank statement

( Refer article on Bank Reconciliation)

(5) Petty Cash Imprest System

· Refer to the article on Petty Cash And Petty Imprest Cash Float.