Acc 220 Week 9 Internal Cash Control
Internal Cash Control
Iasia Goodson
ACC/220
June 27, 2010
Jaclyn Strauss
Internal Cash Control
The weaknesses in the scenario E4-5 are huge. The first one is the fact that the company checks are not prenumbered, how will you keep track of what check was written and what it was written for. Another weakness would be that the purchasing agent and the treasurer are authorized to issue checks that are kept in an unlocked file cabinet. There is so much room for theft here; as well as not having one person assume accountability for the checks, there should only be one person that issues checks; especially with them not having prenumbered checks. Their system allows so much room for mistakes, and they can’t hold one person accountable. The following memo will be a new directive for how things will be handled with purchasing:
MEMO Purchasing Policies • Effectively Immediately all checks will be prenumbered • All checks will be kept in a lock safe, and only the controller will have access to them • The purchasing agent will have continue to pay all bills pertaining to goods purchased for resale with the approval of the controller • The treasurer will continue to oversee to pay all other bills following approval of authorized employees with the approval of the controller. • Please note that all of these policies are …show more content…
effective immediately.
The Guard Dog Company has a great internal cash control system; they have applied the segregation of duties of the internal cash controls system; as well as the establishment of responsibility.
There are two people that are responsible for the checks and that is the treasurer and the assistant treasurer. They also safeguard their assets by keeping the blank checks in a safe in the treasurer’s office. Another example of segregation of duties would be that the treasurer or the assistant treasurer; this allows little room for theft or forgery. This company has a very good internal cash control
system. In the scenario P4-2A has several weaknesses in their internal control principles, the first weakness that I recognized was the fact that no audit has been made in years because the financial secretary has been in that position for fifth teen years, the next thing I noticed was the fact the ushers rotated every month and they were responsible for handling cash. This allows great room for error and theft and who would you hold accountable; you would not know who to blame for anything. This church does not carry any fidelity insurance, which means that the employees are not bonded. The biggest error that was shocking to me was the fact that the head usher was the only one responsible for counting the cash and documenting how was entered into the safe, he could very well take money and just tell everyone that this is what was given by the members of the church. The fact that the head usher position changes every three months is also a red flag as well. Having the church members write the checks out to cash is a big mistake; anyone can take that check and deposit it into their account. I would make the following changes for the ushers; the ushers that serve will serve a term of one year and the head usher will remain in his or her position for the term of two years or more. The counting of the cash is to completed by two ushers and the secretary, all is documented in front of one another with each person signing off on the amount that was collected and deposited. This prevents less room for inaccuracy and theft. One member of the finance committee will be responsible for the deposit of all funds after reviewing and checking what has been counted and made for deposit. The changes should be made effective immediately and all board members shall vote and agree on the changes, the new policies will improve our internal control process and allow less room for error and for theft. Along with the changes made the church will obtain fidelity insurance and any person who will be handing cash will be bonded, this means that each person will have a extensive background checks done on them, any person that does not pass the check , he or she will be discharged from their position, I feel these new changes will be a great addition to the church.
Iasia Goodson
ACC/220
June 27, 2010
Jaclyn Strauss
Internal Cash Control
The weaknesses in the scenario E4-5 are huge. The first one is the fact that the company checks are not prenumbered, how will you keep track of what check was written and what it was written for. Another weakness would be that the purchasing agent and the treasurer are authorized to issue checks that are kept in an unlocked file cabinet. There is so much room for theft here; as well as not having one person assume accountability for the checks, there should only be one person that issues checks; especially with them not having prenumbered checks. Their system allows so much room for mistakes, and they can’t hold one person accountable. The following memo will be a new directive for how things will be handled with purchasing:
MEMO Purchasing Policies • Effectively Immediately all checks will be prenumbered • All checks will be kept in a lock safe, and only the controller will have access to them • The purchasing agent will have continue to pay all bills pertaining to goods purchased for resale with the approval of the controller • The treasurer will continue to oversee to pay all other bills following approval of authorized employees with the approval of the controller. • Please note that all of these policies are …show more content…
effective immediately.
The Guard Dog Company has a great internal cash control system; they have applied the segregation of duties of the internal cash controls system; as well as the establishment of responsibility.
There are two people that are responsible for the checks and that is the treasurer and the assistant treasurer. They also safeguard their assets by keeping the blank checks in a safe in the treasurer’s office. Another example of segregation of duties would be that the treasurer or the assistant treasurer; this allows little room for theft or forgery. This company has a very good internal cash control
system. In the scenario P4-2A has several weaknesses in their internal control principles, the first weakness that I recognized was the fact that no audit has been made in years because the financial secretary has been in that position for fifth teen years, the next thing I noticed was the fact the ushers rotated every month and they were responsible for handling cash. This allows great room for error and theft and who would you hold accountable; you would not know who to blame for anything. This church does not carry any fidelity insurance, which means that the employees are not bonded. The biggest error that was shocking to me was the fact that the head usher was the only one responsible for counting the cash and documenting how was entered into the safe, he could very well take money and just tell everyone that this is what was given by the members of the church. The fact that the head usher position changes every three months is also a red flag as well. Having the church members write the checks out to cash is a big mistake; anyone can take that check and deposit it into their account. I would make the following changes for the ushers; the ushers that serve will serve a term of one year and the head usher will remain in his or her position for the term of two years or more. The counting of the cash is to completed by two ushers and the secretary, all is documented in front of one another with each person signing off on the amount that was collected and deposited. This prevents less room for inaccuracy and theft. One member of the finance committee will be responsible for the deposit of all funds after reviewing and checking what has been counted and made for deposit. The changes should be made effective immediately and all board members shall vote and agree on the changes, the new policies will improve our internal control process and allow less room for error and for theft. Along with the changes made the church will obtain fidelity insurance and any person who will be handing cash will be bonded, this means that each person will have a extensive background checks done on them, any person that does not pass the check , he or she will be discharged from their position, I feel these new changes will be a great addition to the church.