Handling and Safeguarding of Cash Accepting Payments Petty Cash Reconciliation Preparing and Posting Deposits to General Ledger Segregation of Duties Chain of Custody Overages and Shortages
All cash, checks, and payment cards should be kept in a locked/combination vault or safe, or, in a locked drawer or file cabinet.
Access to areas with cash should be limited to specific designated individuals. Only one designated individual should have complete control and responsibility for a cash drawer. Cash should, ideally, be deposited within 24 hours of receipt.
Payments can be received in-person, by phone, or by mail. Payments should be immediately input into an electronic device (cash register, computer) or tracked manually with pre-numbered receipts to ensure that all payments are captured.
A receipt should always be given when in- person payments are made. All mailed check payments should be logged daily. Checks should be restrictively endorsed immediately. Employee recording the original transaction should never be allowed to void, adjust, or write-off a customer transaction or balance.
Departments needing to provide change or reimbursement should request a petty cash fund from General Accounting. Petty Cash should be counted daily and logged. When cash becomes depleted, a replenishment check should be requested by the petty cash custodian to Accounts Payable. No I.O.U.s should be allowed and no co- mingling of personal and organizational cash.
Before balancing, if applicable, the initial start up change fund should be counted and separated from the cash receipts. The Cashier should balance their remaining money to their daily receipts, per the total on their electronic devices or the added total of the pre-numbered receipts.
Checks should be totaled with a calculator tape attached. The Cashier should verify all checks have been restrictively endorsed. Daily receipts and money should be reconciled by a second individual.
Another employee, not the Cashier, should prepare the bank deposit. Keep copies of checks. The bank deposit should be verified by a second individual. Bank deposits should be made daily.
Deposits are posted to General Ledger by the Accounting Department. Accounting Department should match a copy of the deposit slip with bank deposit receipts after deposit has been made. Bank account should be reconciled timely by the Accounting Department.
Separates the following responsibilities in a business process: Custody of Assets Record Keeping Authorization Reconciliation Provides for checks and balances Most effective control in combating employee fraud
Dual controls should be established to ensure that two employees count the cash, together, and sign deposit logs/deposit slips evidencing agreement in amount. When cash changes hands, both employees (the individual delivering and the individual receiving) count the cash, together, and sign deposit documentation evidencing agreement in amount.
When an overage or shortage is identified, the deposit should be recounted and the overage/shortage should be documented immediately. An accounting entry should be made to document the difference in the General Ledger. Overages/shortages should be monitored and, if appropriate, addressed.
Without proper controls, WE RISK Loss of Cash Theft of Cash Bank Statements do not agree with Accounting Records Limited Audit Trail Accusations
SOURCE: Columbia University Uhttp://finance.columbia.edu/content /what-fraud, September 24, 2012
Internal Controls Protect You Protect the Organization Principles of Good Cash Management Include Authorizations Reconciliations Verifications Reconciliations Reviews of Operating Performance Security of Assets Segregation of Duties
Please feel free to contact me if you have any questions. Karen B. Young, CPA, CIA, CFE Internal Auditor La. Department of Natural Resources Email: Karen.Young2@la.govKaren.Young2@la.gov Phone: 225-342-2583