Cash Controls

Cash is important as:

• A.

  Most transactions eventually lead to the business receiving cash (cash receipts) or paying cash (cash payments)

• B.

  Because cash is easily stolen, adequate controls must be implemented to ensure that people with dishonest intentions are detected

• C.

  It allows us to create a cash budget

Fill in the blanks relating to general internal controls over cash:

1. All money received should be evidenced by a .................... or other proof

At regular intervals, the business' records must be checked agains, or reconciled with, an independent record called a bank statement - this is called 'Bank Reconciliation'.  Do you agree/think that it is true that this is an important cash control?

• A.

  True

• B.

  False

1. All cash received should be banked .................. at the end of each day

All payments should be made by cheque or direct debit (electronic funds transfer) unless it is small enough to be made out of a .............................

• A.

  Petty Cash Fund

• B.

  Cash Register

All cash should be kept in a:

• A.

  Cash Register

• B.

  Safe

• C.

  Safe Place

• D.

  Bank Account

After auditing an older style service station business, it was found that one of the employees who was in charge of the banking banks the money on a Wednesday and Friday.  He deducts the wages for the 3 other workers and drawings for the owner out of the cash to be banked before taking it to the bank.  Also, as part of providing good customer service, the employees often fuel the cars up for the customers.  To save time, they pocket the money for the fuel until they have time to go and record it through the cash register.  The owner noticed that newer service stations have technology which automatically records the amount owed from each pump and it automatically rings it up on the cash register, so they money must match the amount on the bowser.  The owner isn't sure whether this is worth doing as it will probably cost a lot. In paragraph style, explain where there may be problems over cash control, identifying and explaining the controls which are being broken, as well as recommending other techniques that would be more effective.