ACC 544: Controls For Inflows
Controls for Inflows
ACC/544
7/10/2013
Controls for Inflows
Internal controls play an important role in the success of any organization. The following is a proposal for appropriate controls to cover cash, sales, accounts receivable, inventory, and production.
Controls
Justification
Cash
Safeguarding Cash
Cash Receipts
Reconciliation
Segregations of Duties Accessing cash should be restricted and kept in a locked and safe compartment.
Cash should be recorded immediately upon receipt with the use of cash register, data entry to computer system, hand written log, numbered receipt.
Cash receipts must be counted and balanced to the cash recording at the end of the business day.
Segregated duties reduce the likelihood …show more content…
To protect a company from financial loss, management must restrict cash access and keep money in locked compartments. Adequate training must be provided to all employees handling cash. Cash registers, data entry computer systems, hand written logs, and numbered receipts are designed to record cash upon receipt, providing a more structured cash balance at the end of the business day. It is also important to segregate duties related to cash handling. This will reduce the likelihood of intentional and unintentional errors (YSU).
The control of sales allows companies to standardize processes, particularly contracts, to help streamline sales. This process will protect the company from unexpected liabilities. Companies must set a dollar amount threshold and hold leadership responsible to sign off on deals and make final approvals. The company must also list negotiating parameters to provide pre-approved concession to close a sale. These parameters include discounts and credits. Finally, management must set clear and accurate sales metrics that are reasonable and attainable (Finkel, …show more content…
Verifying contract terms before creating an invoice will prevent companies from making unnecessary payments. Proofreading invoices is also an important measure that protects companies from errors which may potentially delay payments. Similar to cash controls, segregation of duties is important in accounts receivables. Individuals handling incoming payments must not be responsible for creating credits. This control will help prevent embezzlement. To verify proper cash applications, management must periodically trace a selection of cash receipts to customer invoices (Accounting Tools, 2013).
When maintaining an adequate internal control system, inventory must be tracked, secured and accounted for. Tracking inventory is necessary to business in order to account for item costs, losses and to become aware of changes. Periodic Audits of inventory items is necessary to ensure that the tracking system is working adequately. Auditing inventory can also assist in catching any costly changes. Lastly, securing the inventory in a centralized place is essential in preventing theft and protecting assets.
ACC/544
7/10/2013
Controls for Inflows
Internal controls play an important role in the success of any organization. The following is a proposal for appropriate controls to cover cash, sales, accounts receivable, inventory, and production.
Controls
Justification
Cash
Safeguarding Cash
Cash Receipts
Reconciliation
Segregations of Duties Accessing cash should be restricted and kept in a locked and safe compartment.
Cash should be recorded immediately upon receipt with the use of cash register, data entry to computer system, hand written log, numbered receipt.
Cash receipts must be counted and balanced to the cash recording at the end of the business day.
Segregated duties reduce the likelihood …show more content…
To protect a company from financial loss, management must restrict cash access and keep money in locked compartments. Adequate training must be provided to all employees handling cash. Cash registers, data entry computer systems, hand written logs, and numbered receipts are designed to record cash upon receipt, providing a more structured cash balance at the end of the business day. It is also important to segregate duties related to cash handling. This will reduce the likelihood of intentional and unintentional errors (YSU).
The control of sales allows companies to standardize processes, particularly contracts, to help streamline sales. This process will protect the company from unexpected liabilities. Companies must set a dollar amount threshold and hold leadership responsible to sign off on deals and make final approvals. The company must also list negotiating parameters to provide pre-approved concession to close a sale. These parameters include discounts and credits. Finally, management must set clear and accurate sales metrics that are reasonable and attainable (Finkel, …show more content…
Verifying contract terms before creating an invoice will prevent companies from making unnecessary payments. Proofreading invoices is also an important measure that protects companies from errors which may potentially delay payments. Similar to cash controls, segregation of duties is important in accounts receivables. Individuals handling incoming payments must not be responsible for creating credits. This control will help prevent embezzlement. To verify proper cash applications, management must periodically trace a selection of cash receipts to customer invoices (Accounting Tools, 2013).
When maintaining an adequate internal control system, inventory must be tracked, secured and accounted for. Tracking inventory is necessary to business in order to account for item costs, losses and to become aware of changes. Periodic Audits of inventory items is necessary to ensure that the tracking system is working adequately. Auditing inventory can also assist in catching any costly changes. Lastly, securing the inventory in a centralized place is essential in preventing theft and protecting assets.