Keeping cash on hand in your business? It’s a good idea to have a safety net, but be sure to have internal controls in place. We also discuss how to keep your control environment in place with many still working remotely. Show *Editor’s Note: This blog has been updated as of September 20, 2021. Does your organization still receive cash payments? Though many organizations try to avoid keeping cash on hand, sometimes it’s necessary. Luckily there are ways to help safeguard your business. In order to protect yourself with regards to cash collected, it is important to implement good internal controls within your organization. How has that changed in the remote work environment? Read on. 5 key internal controls There are five ways your organization can strengthen its internal controls over handling cash:
Maintaining Controls in a Remote or Hybrid Work Environment COVID-19 has forced many organizations into a remote or hybrid work environment, bringing on a new set of challenges. Internal controls designed to operate effectively in an office environment may not be ideal for a remote or hybrid workplace. Here are some ways you can maintain controls in a remote or hybrid work environment.
With the implementation and proper monitoring of the five controls noted above as well as reviewing to ensure all controls are continuing to operate properly in a remote/hybrid environment, an organization can help minimize the risk of errors, decrease the opportunity for fraudulent activity and increase the chance of detecting errors within the cash collection cycle. Management should also investigate and resolve discrepancies noted from reviews, reconciliations, and other internal analysis of accounting transactions on a timely basis. Have questions on your organization’s cash handling procedure? Reach out to us. These guidelines include all departments at the University of Richmond that accept cash or check payments from students, faculty, or staff for miscellaneous charges. These guidelines do not cover the following transactions: (1) charitable gift payments, which should be sent to Advancement services for proper recording, and (2) departments that create their own Banner cashier sessions and deposits are excluded from this policy. Purpose To establish and maintain uniform cash receipting policies and procedures across the University of Richmond campus. Guidelines University departments in a funds handling capacity should be committed to establishing and maintaining strong internal controls around the cash receipts process to prevent the mishandling of funds and safeguarding against loss. Strong internal controls also protect employees by defining crosschecking roles for funds handling responsibilities. Departments responsible for handling checks and cash must maintain written procedures outlining each step in the funds handling process. These procedures should be reviewed at least annually to ensure that the procedures are current. For those departments that do not have adequate staff to support proper separation of duties, compensating controls must be established to ensure procedures are followed. Compensating controls are additional procedures to help reduce the risk of error or loss. Departmental procedures should also address the security of funds (i.e., locking file cabinet, safe) during the workday, and storage for overnight safekeeping. The Bursar’s Office, in consultation with Internal Audit, will conduct annual reviews of randomly selected offices to ensure the following:
Procedures Departments must record all currency transactions on the transaction log (see attached). Currency transactions include cash, check, money order, traveler’s check, cashier’s check or teller’s check. Departments must purchase multi-part pre-numbered receipt books and give receipts for all cash transactions. All receipts must include, but are not limited to, the following information: the date received, the dollar amount, a receipt number, name of the person paying for the transaction, description of the service or product, name of the department or area collecting the funds, and signature of the cash handler. Unused receipts must be maintained in a secured location. Receipts may be purchased through any office supply store. Here are some key things to keep in mind when writing your procedures: What are the controls in cash receipts?Recording Cash Receipts
Ideally receipts should be pre-numbered and two-part. One copy should be provided to the payer while the other copy is kept on file. Total deposits can be verified independently by another person by accounting for each sequentially numbered receipt.
What is the most important control in the cash collection process?One of the most important steps your unit can take to protect cash -- and you the cash handler -- is to separate cash handling duties among different people. This way, no one person has control over the entire cash handling process. This principle is called Separation or Duties or Segregation of Duties.
What are the four control measures for cash?There are four internal control measures for cash. They are employee background checks, use of written protocols, separation of duties, and securing assets and cash in safe locations.
Which of the following are internal controls related to cash receipts?Explanation: A basic internal control procedure is to deposit all cash receipts in the bank shortly after the cash is received. It is common for company's to deposit cash receipts on a daily basis. They need to record them in the accounting system and then take them to the bank.
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