Internal Cash Control

Topics: Cheque, English-language films, Process control Pages: 3 (739 words) Published: September 26, 2010
Internal Cash Control

Iasia Goodson


June 27, 2010
Jaclyn Strauss

Internal Cash Control

The weaknesses in the scenario E4-5 are huge. The first one is the fact that the company checks are not prenumbered, how will you keep track of what check was written and what it was written for. Another weakness would be that the purchasing agent and the treasurer are authorized to issue checks that are kept in an unlocked file cabinet. There is so much room for theft here; as well as not having one person assume accountability for the checks, there should only be one person that issues checks; especially with them not having prenumbered checks. Their system allows so much room for mistakes, and they can’t hold one person accountable. The following memo will be a new directive for how things will be handled with purchasing:

Purchasing Policies
• Effectively Immediately all checks will be prenumbered • All checks will be kept in a lock safe, and only the controller will have access to them • The purchasing agent will have continue to pay all bills pertaining to goods purchased for resale with the approval of the controller • The treasurer will continue to oversee to pay all other bills following approval of authorized employees with the approval of the controller. • Please note that all of these policies are effective immediately.

The Guard Dog Company has a great internal cash control system; they have applied the segregation of duties of the internal cash controls system; as well as the establishment of responsibility. There are two people that are responsible for the checks and that is the treasurer and the assistant treasurer. They also safeguard their assets by keeping the blank checks in a safe in the treasurer’s office. Another example of segregation of duties would be that the treasurer or the assistant treasurer; this allows little room for theft or forgery. This company has a very good internal...
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