Acc220 Internal Cash Control

Topics: Internal control, Cash, English-language films Pages: 4 (1106 words) Published: September 22, 2013
Scenario E4-5
A)List the weaknesses in internal control over cash disbursements. 1)Checks are not pre-numbered. When checks have no numbers, no one will know if a check is misplaced or stolen. 2)Too many people are authorized to sign checks. The treasurer should be the only person authorized. 3) Checks are not being kept in a safe area. A filing cabinet, even a locked one can be easily pried open and checks stolen. 4)Segregation of duties is not being done, the purchasing agent should not be paying the bills if he is ordering, receiving, and paying for these items. 5)There is a lack of documentation procedures. The treasurer pays all other bills after approval from authorized employees, there should be some documentation procedures set up. 6)After payment, the treasurer stamps the bills paid and files them by payment date. The bills and the invoice should also have the date, check number, and signature of the person writing the check. 7) If the treasurer is paying the bills, he or she should not be doing the reconciling also.

B)Write a memo indicating your recommendations for improving company procedures.

The following procedures should be implemented immediately in order for our company to have a better control of our internal control over cash disbursements. The following steps should be taken: Establishment of Responsibility: Only the treasurer should be authorized to sign checks. Segregation of Duties: The purchasing agent should not be ordering, receiving, and paying for goods. We need to set up a system in which the following will happen. The purchasing agent will order the goods. The inventory clerk will receive the merchandise and a bookkeeper will match the invoice with the job order, assign a check number. The treasurer will sign the checks. Documentation, Independent Internal Verification and other controls. The lack of documentation procedures is worrisome. The following are the recommendations. oStart using pre-numbered...
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