Controls Over Cash Receipts

Because cash is the easiest asset to misappropriate, it is vitally important that the owner or owners of the business set up a good system of internal control over cash. Controls can be around either Cash Receipts or Cash Payments.

Cash receipts may originate in a number of ways. The two most common controls are cash received through over-the-counter sales and mail receipts of cheques from debtors. The following controls over cash receipts are recommended:

  • Ensure that designated personnel are authorised to handle the cash receipts (ie cashiers)
  • In the case of cheques received through mail, ensure wherever possible that mail receipts are opened in the presence of two employees
  • If cash or cheques are received through mail, ensure that a list of cheques and remittance advice is prepared, summarising all cash and cheques received and sent to the person responsible for banking the monies. A copy of this remittance advice should be sent to the person responsible for entering the transaction into the accounting system
  • In the case of cash sales, and entity should use the cash register to record each sale. A cash register tape is locked into the register until removed y a supervisor or manager. The tape accumulates all of the daily cash, EFTPOS and credit card transactions that have occurred. When the tape is remived at the end of each day, the total takings on the tape should reconcile to the total amount of cash plus EFTPOS and credit card slips in the cash register. Ideally, a second individual should count these receipts from the cash register and verify them against the tape. The second person should then prepare a deposit slip and attend to banking the money and any manual credit card vouchers.
  • All cheques and cash received through mail and over-the-counter sales should be banked daily. Monies should not be left in the office overnight. If this is necessary because the bank is closed or it is not practical to deposit the monies that day, make sure that it is locked away securely, preferable in an office sage. It is not advisable to take the money home.
  • Whereever possible, ensure that different individuals are responsible for handling the cash and cheques, recording transactions into the accounting system and banking the monies
  • Ensure that there is a cash register which keeps a record of the amount of cash sales during the day. At the end of each day, this tape should be printed off and reconciled to the amount of cash and EFTPOS and credit card receipts in the cash register. Ideally, a second individual should count these receipts from the cash register and verify them against the tape. The second person should then prepare a deposit slip and attend to banking the money and any manual credit card vouchers, and
  • Lock away petty cash in a small office safe

Topics: Compliance, Cashflow