Internal cash control

Internal cash control
a) Among the most widely met problems dealing with the weaknesses in internal control over cash disbursements could be mentioned the proper segregation of duties, responsibility establishment, security measures and appropriate document procedures. Each company should be confident about effective and ethical work performance and as well as the possibility of funds maintenance. If we speak about the concrete case dealing with the Idaho Company, there could be easily observed already mentioned. The first most noticeable weakness is the absence of the prenumbered checks, which are used for making payments. Another significant drawback dealing with the security measures is that they are kept in an unlocked file cabinet. But responsibility establishment is also one of the most problematic questions, especially when it comes to the access to the funds and paying bills issue. In the case of Idaho Company, two people could provide payments and that is violation of the primary rules, when only treasurer should be responsible for the bills payment. It goes without saying that it has a negative impact o the Idaho Company Development

b) Memo

To: President of Idaho Company
From: __________________
CC: ____________
Date: __________
Re: Internal Cash Control Recommendations

In order to provide successful solution for the created problem within the internal cash control in Idaho Company, we have developed a number of recommendations

First of all we consider that Idaho Company got to create effective responsibility establishment, which could help to provide effective control of the funds and work performance. The treasure of the company should be the one person responsible for paying bills. Another important issue is that the company should establish the system of prenumbered checks; this would also raise control of the funds. The checks should be kept in the closed file cabinet; this would reduce the ability of taking them easily and raise the security within the company. After completing the list of recommendations the progress within internal cash control would be undoubtedly observed.

#2

The Guard Dog Company used the following among the internal control principles and their application to cash disbursements:

- Sarbanes Oxley Act
- Responsibility establishment
- Segregation of Duties
- Documentation of Procedures

#3 a) From the very beginning I would like to make a stress on the fact that the church operates the old fashioned ideas and there could be observed a number of weaknesses dealing with internal accounting control in the handling of collections. I’d like to begin with the absence of the audit procedure and the board of trustees. The recordkeeping and collections procedures are not actually observed and the church is not holding any kind of fidelity insurance. The financial secretary has been working on the position too long and as there were no even a slight mention about audit, there could be hardly signified whether financial secretary trustworthy or not. Another significant weakness is that the usher deals with all the financial operation and nobody controls him and even try to verify hi count. Another significant drawback is that the members of the church have an instruction to write down the checks, which should be transferred to cash. The financial secretary is the only person who deals with the bank statements and keeping the records, it goes without saying that there is no way to reveal whether the deposits balances and other financial operations are appropriate.

b)The financial processes implemented in church should be undoubtedly changed. The financial secretary must not have any deal with reconciling the banks statement. The bank statement should be directly passed monthly to the pastor or a reconciliation trustee. The ushers counting money should be controlled by each of them and after final verification one the ushers should deposit it to bank, then providing a deposit slip to the financial secretary and finally the members of the church ought to write the checks to the church, but not to the cash.

It goes without saying that after providing all the necessary changes the work performance in church would be more co0ntrolled and secure. The Internal control of cash would be also controlled by different instances and it won’t be a problem to verify the financial operations happening. It should be essential to note that current state of things is inadmissible in the contemporary financial world. That is why it should be changed

1. Rezaee, Zabihollah. Financial Statement Fraud: Prevention and Detection. New York: Wiley; 2002.
2. nternational Organization of Supreme Audit Institutions (INTOSAI): Guidelines for internal control standards (1992)
3. Committee of Sponsoring Organizations of the Treadway Commission: Internal control - integrated framework (1994)

Internal cash control 8 of 10 on the basis of 3984 Review.