Internal Cash Control

Topics: Money, Responsibility, Individual responsibility Pages: 3 (1016 words) Published: September 6, 2008
Internal cash control is very important to any business. Without effective methods in place to ensure that funds and resources are being used in an ethical and efficient way, a company may lose money or run into many other problems. Through proper establishment of responsibly, segregation of duties, document procedures, and security measures, any company should be able to maintain their funds and feel confident that their employees are producing accurate and ethical results.

In the exercise detailing the cash disbursement within Idaho Company one could find some major weaknesses. The first of these weaknesses with their internal control over cash disbursements would be the checks they use to make payments. These checks are not prenumbered and they are kept in an unlocked bock. To ensure internal control over disbursement of cash a company must have prenumbered checks for record keeping purposes and must always keep their checks in a secure area where only specific people would have access. The next issue that needs to be addressed with Idaho Company is the establishment of responsibility when it comes to paying bills and having access to funds. In this scenario there are two people who have divided the responsibility of paying bills. Only the treasurer should have this responsibility and the person in charge of paying the bills should never be responsible for reconciling the payments. In order to inform Idaho Company of the breakdown in internal cash control within the company, the following memo was created:

To:President of Idaho Company
From:Justin D Lowe
CC:Finance Manager
Re:Internal Cash Control Suggestions
In order to help resolve Idaho Company’s internal cash control issues, Suggestions Inc. has come up with a few suggestions. Treasurer
First we believe that Idaho Company should create an official and effective establishment of responsibility. The treasurer should be exclusively responsible for paying bills and...

References: Kieso, D., Kimmel, P., & Weygandt, J. (2003). Essentials of accounting: Tools for business
decision making (2nd ed.). Hoboken, NJ: John Wiley & Sons, Inc.
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