Ms. Fatma is cashier working in Spar Super Market. She purposely does not records the amount...

Ms. Fatma is cashier working in Spar Super Market. She purposely does not records the amount received by customer. Many times, she records less amount in the books of account compare to actually received by customer. To manage her mistake in record of cash transaction, she records fictitious transaction. Several time she got caught by manager for recoding more amount than the actual paid amount to supplier. You are requied to decsibe the given situation in context of manipulation of cash , Also suggest any three required action to control such type of cash manupullation.

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Expert Solution

Accountants may manipulate cash flow to make it appear higher than it otherwise should. A high cash flow is a sign of financial health. A better cash flow can result in higher ratings and lower interest rates. Companies often finance their operations by raising equity capital or through debt, and it is extremely useful to be able to present a healthy company.

Here in our scenario, showing higher expenses and lesser customer recovery is a typical example of holding cash for personal benefit. Ms. Fatma seems to be using the differential cash not for company pupose but own use. It's a wrong practice and should not be followed.

Three actions to control cash manipulation:

1. Maker checker control

Each accounting entry should have a maker checker control. If Ms. Fatima is making entries then her manager should regularly check all the entries.

2. Compare receipts with Sale Invoices

All receipts recorded should be compared against the sale invoices. If lesser receipt during a period is reported, then supervisor or independent team should reach out to the customer to check the reason for delay or short payment.

3. Compare payments with Purchase Invoices

All payments recorded should be compared against the purchase invoices. If higher payment during a period is reported, then supervisor or independent team should reach out to the vendor to validate payments done.

Be clear about who is responsible for what

Everyone in the organisation should be completely clear about who is responsible for handling cash, and what their specific responsibilities are. If possible, set out the responsibilities on job descriptions. Everyone should also know who is not allowed to handle cash.

ekkarill92 answered 1 year ago

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