Why is internal control important for cash?
business September 20, 2021 Keeping cash on hand in your business? It’s a good idea to have a safety net, but be sure to have internal controls in place. We also discuss how to keep your control environment in place with many still working remotely. *Editor’s Note: This blog has been updated as of September 20, 2021. Does your organization still receive cash payments? Though many organizations try to avoid keeping cash on hand, sometimes it’s necessary. Luckily there are ways to help safeguard your business. In order to protect yourself with regards to cash collected, it is important to implement good internal controls within your organization. How has that changed in the remote work environment? Read on. 5 key internal controls There are five ways your organization can strengthen its internal controls over handling cash:
Maintaining Controls in a Remote or Hybrid Work Environment COVID-19 has forced many organizations into a remote or hybrid work environment, bringing on a new set of challenges. Internal controls designed to operate effectively in an office environment may not be ideal for a remote or hybrid workplace. Here are some ways you can maintain controls in a remote or hybrid work environment.
With the implementation and proper monitoring of the five controls noted above as well as reviewing to ensure all controls are continuing to operate properly in a remote/hybrid environment, an organization can help minimize the risk of errors, decrease the opportunity for fraudulent activity and increase the chance of detecting errors within the cash collection cycle. Management should also investigate and resolve discrepancies noted from reviews, reconciliations, and other internal analysis of accounting transactions on a timely basis. Have questions on your organization’s cash handling procedure? Reach out to us. Stay informed. Get all the latest news delivered straight to your inbox.Also in Business BlogHow can internal control control cash?Best practices:. Record cash receipts when received.. Keep funds secured.. Document transfers.. Give receipts to each customer.. Don't share passwords.. Give each cashier a separate cash drawer.. Supervisors verify cash deposits.. Supervisors approve all voided refunded transactions.. What is the most important internal control over cash?Records and Documentation
This is one of the most important internal controls on cash collection. If the payer is present in the office, the clerk should issue a signed receipt listing the date and amount received.
What are some common internal controls for cash?5 Important Internal Controls for Cash Disbursements. Segregate duties. The foundation of a good internal control system is segregation of duties. ... . Review authorized signors. ... . Consider requiring dual signatures. ... . Remember the wire transfers. ... . Reconcile bank accounts in a timely manner.. What is the primary goal of internal controls for cash payments?The primary goal of internal controls for cash payments is to ensure that the business pays only for properly authorized transactions. Banks provide important services to individuals and businesses. They accept deposits, process payments to others, and provide statements that account for these and other transactions.
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