What Should Be Internal Control Over Cash Payment?


7 Answers

Matt Domm Profile
Matt Domm answered
Cash can be classed as a form of liquid asset and it can easily be transferred and it is not totally identified by a unique term. It is a good idea to have strong controls for the procedures of cash internally, as this will protect the person who is receiving the money and also the person who is paying the money. As with all other internal procedures that are in place it is very important that the controls are detailed in writing so that everyone is aware of the procedures that are in place. 
All cash payments should be identified in writing as soon as the money is received. It is important that two receipt copies are written and one of these is given to the person who is paying the money and the person who is receiving the money should retain the other copy. The acceptable format that can be used for dual copy receipts include printouts from a cash register, written copies and also receipts that are generated on the computer. Receipts that are written by hand or generated on the computer should detail the value of cash that has been received, the person’s name who is paying it, date received, what the payment is for, the account number and name on the account and also the person who is receiving the money.  
If any cash amounts are received in the post a receipt should be prepared and sent out to the person who has made the payment and a copy should be retained by the business. It is a good idea to have two people present when the mail is being opened as this safeguards the person that is dealing with it. It is important that as much as possible the access to cash is limited to a few people or even better just one person. This means that they are accountable for the money.
Amen Bukhari Profile
Amen Bukhari answered
There are lots of chances of misappropriation of cash if there is no well organized system of internal control in operation. There are different suggestions of internal check as regards cash payments. Payments by cheque, issue of crossed cheques, unused cheques book, proper authorization, recording in cash book, proper agreement of vouchers etc are the suggestion for internal check. All payments as far as possible, except for petty cash should be made by cheques. Cheques should be crossed before they are dispatched. Unused cheque books should be kept under look and key by a responsible official lest they may be used by forging the signature of the officers.

Before a cheque is issued, it should be presented along with the account of the payee to a responsible officer for his signature. Cashier should not sanction the payments of special nature. Directors should do so. Internal control should be exercised over the preparation of the wages sheets to prevent fraud and manipulation. As soon as payment is made, it should be recorded in the cash book. All payments vouchers should be filed and arranged in order of their occurrences so as to facilitate the subsequent checking by the auditors.
amber Jhon Profile
amber Jhon answered
There are various measures taken to increase the internal control over cash. The first element is the separation of duties. According to this element of control, no person should have set of duties which may assist him to misappropriate the assets of the company. Secondly, for the transference of physical assets proper authorization should be required. Thirdly, duties and responsibilities of the employees should be clearly defined and communicated. Documentation is required for all of the transactions made. Companies must have policies to secure cash, and bank reconciliation is very necessary. Moreover, in order to determine the internal control over cash of a company, ratios like liquidity ratio, solvency ratio and working capital should be calculated.
Anonymous Profile
Anonymous answered
Paid by check.
Richard Himmeler Profile
A systematic accounting sysytem, having monitoring of all cash transactions, like in and out  entries, authentications and approval levels alll in place.
Anonymous Profile
Anonymous answered
All over-the-counter receipts are registered on cash registers.

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