Cash Control

In: Business and Management

Submitted By bella0910
Words 1405
Pages 6
Internal Cash Control
Axia College of University of Phoenix

Scenario E4-5
Idaho Company
The Idaho Company scenario presents few weaknesses in internal control over cash disbursements. The first weakness comes obvious when they do not have pre-numbered checks and the more than one person has access to them, in this case two employees, the treasures and the purchasing agent, both have access to unissued checks. Additionally checks are kept in an unsecured (unlocked) file cabinet.
Another weakness is that the Idaho Company does not require two have both signees sign the checks and only one person able to issue checks; on the contrary they both can issue checks.
When it comes to checks and balances on procedures, only the purchasing agent is verifying the accuracy of the invoices and the sole checking account is only reconciled by one person; this creates a conflict of interest, additionally all the paid invoices get stamped with the word "paid” on the paper copy before the invoice is filed away.
The recommendations that I would submit to the following:
Establishment of responsibility: I will require having only one person responsible, that person will be entrusted with the key to the file cabinet in which the unissued checks are stored.
Physical, mechanical, and electronic methods: I recommend that Idaho Company should immediately order pre-numbered checks. If this does not happen, checks can be taken and not accounted for because there is no numbering sequence. A safe with combination only accessible by two people: the treasurer and the president or general manager of the company.
Segregation of Duties: Both the purchasing agent and the treasurer will verify the accuracy of vendor bills prior to payment. The accuracy of the vendor bills will again be verified by a third employee. After the triple verification process, checks will be issued and both the…...

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