In: Accounting
Pauli Company’s internal controls over cash disbursements provide for the treasurer to sign checks imprinted by a checkwriter after comparing the check with the approved invoice. Identify the internal control principles that are present in these controls
Internal controls over cash disbursements include:
a) having only specified individuals such as the treasurer authorized to sign checks
(b) assigning the duties of approving items for payment, paying the items, and recording the payment to different individuals
(c) using prenumbered checks and accounting for all checks, with each check supported by an approved invoice; after payment, stamping each approved invoice "paid"
(d) storing blank checks in a safe or vault with access restricted to authorized personnel, and using a machine with indelible ink to imprint amounts on checks
(e) comparing each check with the approved invoice before issuing the check, and making monthly reconciliations of bank and book balances; and
(f) bonding personnel who handle cash, requiring employees to take vacations, and conducting background checks.
Internal controls over cash receipts include:
(a) designating only personnel such as cashiers to handle cash
(b) assigning the duties of receiving cash, recording cash, and having custody of cash to different individuals
(c) obtaining remittance advices for mail receipts, cash register tapes or computer records for over-the-counter receipts, and deposit slips for bank deposits
d) using company safes and bank vaults to store cash with access limited to authorized personnel, and using cash registers in executing over-the-counter receipts
(e) making independent daily counts of register receipts and daily comparisons of total receipts with total deposits; and (f) conducting background checks and bonding personnel who handle cash, as well as requiring them to take vacations.