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.