Controls and Processes" discusses the revenue and cash collection process and controls. Exhibit 8-16 shows some...

Controls and Processes" discusses the revenue and cash collection process and controls. Exhibit 8-16 shows some cash receipts controls and risks. What are some of these controls? How can a company help protect itself in the cash collection process from a potential fraud?

Expert Solution

Exhibit 8-16 shows some cash receipts controls which are as follows:

Authorisation:

Only Designated person opens ans closes bank accounts.
Cash Reciepts are approved prior to bank deposit.

Segregation of duties:

Separation of custody of cash from responsibility of reconciling bank accounts.
Separation of custody of cash from accounts recievable record keeping which minimises the risk of invalid cash receipt or ommitted transactions.
Separation of duties related to cash reciepts journal preparation, credit approval, inventory handling,information systems and general accounting.

Security:

Physical Controls in areas where cash is recieved.
There should be proper IT controls over computer records and physical controls over record storage areas.
Cash reciepts should be deposited in bank on daily basis.

Records and Documents:

Preparation of deposit slips on prenumbered forms.
Preparation of customer accounts statements.
Preparation of cash reciept journals and accounts recievable re cords only when cash has actually been recieved.

Independent Checks and Reconciliation:

cash counting and comparison of daily deposit with cash reciept journal.
preparation of bank reconciliation statement.
matching of remmittance advice with cash reciept journal.

A company can protect itself from a fraud in cash collection process by segregating duties and impleting variety of internal controls to protect its valuable cash.

ekkarill92 answered 2 years ago

Understanding revenue, the reimbursement process, and data collection in the revenue cycle is crucial to supporting...

Understanding revenue, the reimbursement process, and data collection in the revenue cycle is crucial to supporting the financial foundation of an organization. Take a moment and reflect on what you have learned over the past ten weeks and how it applies to your future role in the healthcare industry. Instructions: How do you think you will utilize the aspects of the course “Reimbursement Methodologies” in your career in health information or health care? Provide an example. This Discussion Board is...

Some companies prefer to keep the cash collection process internal by receiving customer payments by check...

Some companies prefer to keep the cash collection process internal by receiving customer payments by check in the mail direct to the company and maintaining employees that receive, open, record and process the customer checks to the bank. Other companies prefer using the bank as an external processing service through lockboxes and using bank employees to receive, open mailed checks, record and process the checks received. Which method do you prefer? Describe the benefits and concerns with each method.

Revenue cycle : sales to cash collection Identify major threats in the revenue cycle, and evaluate...

Revenue cycle : sales to cash collection Identify major threats in the revenue cycle, and evaluate the adequate of various control procedures for dealing with those threats. Accounting information system

1A) Exhibit 8-1 Quantity and total revenue data for a firm Quantity Total Revenue 0 $ 0...

1A) Exhibit 8-1 Quantity and total revenue data for a firm Quantity Total Revenue 0 $ 0 1 62 2 124 3 186 Exhibit 8-1 indicates that this firm is operating in which type of market structure? a. Nonhomogeneous. b. Perfect competition. c. Price-maker. d. Unprofitable. 1B) Suppose a company increases production from a point where marginal cost equals average total cost to a point where marginal revenue and marginal cost are equal. Is it a good idea for the company...

Why are internal controls important in an organization? Describe some internal controls that relate to cash...

Why are internal controls important in an organization? Describe some internal controls that relate to cash receipts and cash disbursements. Please answer in your own words. Do not use outside resources.

Petty Cash is easily misappropriated if business processes and internal controls are not established and enforced....

Petty Cash is easily misappropriated if business processes and internal controls are not established and enforced. Provide and explain a minimum of four controls and/or concepts that will help a company ensure that its petty cash accounts are appropriately used and safeguarded.

Revenue generally should be recognized at the time of cash collection. when the performance obligation is...

Revenue generally should be recognized at the time of cash collection. when the performance obligation is satisfied. when realized. at the end of production.

This process is for Senior Management and shows how the Senior Management controls the project. Which...

This process is for Senior Management and shows how the Senior Management controls the project. Which process am I referring to? This is a very short pre-project process that gathers the necessary data to start the project. Which process am I referring to?

Please list three tests of internal controls for each of the following: Revenue and cash receipts....

Please list three tests of internal controls for each of the following: Revenue and cash receipts. Why do you think these controls are important?

list three tests of internal controls for each of the following: Revenue and cash receipts. Why...

list three tests of internal controls for each of the following: Revenue and cash receipts. Why do you think these controls are important?

Question