14. Controlling the bookkeeping system Flashcards
The need for financial controls
check accuracy
segregate duties
Authorisation procedures
large cheques signed by two people
set up new payables authorized by senior person
POs authorized correctly
Refunds checked
Documentation
raising an order
receipt of the goods
receipt of the invoice
payment of the invoice
Organisation of staff
Segregation of duties
no one person should have complete control over any section of the bookkeeping system
Safeguarding assets
Assets recorded and maintained in asset register
Spot checks
petty cash balances, bank balances, ledger accounts
Reconciliations
producing a trial balance
bank rec
supplier rec
control account rec
Bank rec
to check the accuracy of an organization’s bank account record by comparing to the bank statements
Differences between the bank statement and the cash book
unrecorded items
timing differences
errors
Steps to undertake a bank rec
1 tick off all items in the cash book and the bank statement
2 Update the cash book with unticked items in the bank statement
3 prepare the bank rec with the unticked items in the cash book
bank rec format
balance as per bank statement
less: unpresented cheques
add: uncleared receipts
balance equal to updated cash book
total debtors
total receivables
debtors/ receivables control account
sales ledger control account
total payables
total payables
creditors control account
purchase ledger control account
Transfer totals from sales daybook
DR sales ledger control account
CR sales
Transfer totals from purchase daybook
DR purchases
CR purchase ledger control account
Sales ledger control will include
DR sales daybook
DR dishonoured cheque
CR sales returns daybook CR cash book received CR discount allowed CR Irrecoverable debt CR Contra entry
Purchase ledger control account will include
DR cash book received
DR discount received
DR Contra entry
DR purchase returns daybook
CR balance bd
CR purchase daybook
Contra entry
If supplier is also a customer net off owed and owing under contra entries
Suspense accounts
if trial balance doesn’t balance and you can’t find out why due to incorrect additions, only one side has been posted, different values have been entered to DR and CR
add in suspense account amendment
