In: Accounting
Sometimes there can be errors while making change for a customer or recording a check incorrectly. What are some of the controls we can put over cash that would help prevent errors?
Cash and Internal Controls.
Since cash is the most liquid of all assets, a business cannot survive and prosper if it does not have adequate control over its cash. Cash is the asset that has the greatest chance of “going missing” and this is why we must ensure that we have strong internal controls build around the cash process. Since many business transactions involve cash, it is a vital factor in the operation of a business. Of all the company’s assets, cash is the most easily mishandled either through theft or carelessness. To control and manage its cash, a company should:
The need to control cash is clearly evident and has many aspects. Without the proper timing of cash flows and the protection of idle cash, a business cannot survive.
Companies protect their Cash by
(1) segregating employee duties,
(2) assigning specific duties to each employee,
(3) rotating employee job assignments, and
(4) using mechanical devices.
Measures to prevent CASH errors.
Your employees are not kept accountable for their cash.
No one is really in charge.
Your cashiers are using careless transaction practices.
Your cash management system is outdated.