Cash & bank cycle Flashcards
receive money risks?
- theft of receipts (v)
- receive incorrect amount (a)
initiate
deposit receipts risks?
- all cash receiped is not banked (c)
execute
cash reciepts
recording risks?
- recorded receipts never occurred (v)
- amounts are recorded incorrectly (a)
- amounts are recorded in the incorrect period (c)
recording
process risks?
- all receipts are not recorded (c)
process
control objectives relating to receipts?
all receipts:
- are adequitely safeguarded (v)
- are correctly calculated (a)
- are banked (c)
- are supported by underlying documents as evidence of actually occuring (v)
- are recorded at the correct amount actually received (a)
- of cash are recorded timely in the correct accounting period (c)
- are recorded in the accounting records and no receipts are misappropriated or omitted (c)
make payment (cheque/ EFT) risks?
- payment not in terms of policy (v)
- payment made to fictitious supplier (v)
- pay more than once (v)
- pay incorrect amount (a)
- no payment made at all (c)
payments
recording risks?
- payment recorded did not occur (v)
- incorrect classification on recording (a)
- incorrect recording (a)
- payment not recorded at all (c)
- payment not recorded in the correct period (c)
control objectives relating to payments?
ensure that:
- payments are authorised in terms of the approved payment policy
- payments are made to the correct suppliers
- payment amounts are calculated correctly
- payments are for transactions that actually occurred, and goods and services were received
- payments ae classified in the correct acounts in the financial records
- all payments are recorded in the accounting records
types of GL accounts?
- bank account: for ordinary income & expenses
- petty cash: for smaller specific expenses, controls required, fixed amount top-up
- cash on hand
- salary bank account
- advance accounts
- deposit/ saving accounts
perfect cycle
general controls?
- there should be notices at a chasier counter or a policy
- receipt’s should be kept as proof
- should be regular number sequence checks for receipts
- should be reconciliations between all accounting records
- cash should be cleared out of the cash register on a frequent basis and placed in drop safe
- general manager should perform surprise inspections and cash counts
- manager should review and follow up on differences
- staff should be well trained and should receive additional training as the need arirses
- staff should be rotated on a frequant basis
- adequate segregation of duties should be implemented between functions
perfect cycle, receipts
credit card receipts?
- online should by credit card should be processed online to the banks to ensure customer is credit worthy
- altrenatively, cashier could also request client’s ID and review detials
- cashier could make imprint/ photocopy of the cusomer’s credit card thus maintaining records of customer’s details and card’s security code
- cashier should review signature, and details such as expiry date etc to details on credit card slip
- credit card slips should be pre-numbered, and manager should perform sequence review when the cash register is cashed up
- payment should be followed up with the bank until payment is received
perfect cycle, receipts
cash receipts?
- cash registers should be used over cash drawers with the price and amount due being displayed prominently
- prices should not be rounded amounts (to force cashier to open cash register and give customer change)
- all sales on cash register should be recorded on cash register roll which cashier does not have access
- cash register should be lockable, with cash register being removed if cashier goes on breaks
- the till roll should be used to write up the accounting records. not the deposit slips
- manager should review CRR for unusual amounts or any altered transactions
- when cash is received: deposited into bank daily/ weekly; safeguarded in the safe from the time of receipt until banking; there should be segregation of duties between all the functions involving cash
perfect cycle, cash receipts
other cash register controls?
- mounted fixed and securely
- positoined at exit
- items should be rung up in presence of clients
- there should be copies of cash register slips
- there should be sufficient cash register rolls
- at the end of the day, the money in the drawer should be reconciled with the cash register rolls
perfect cycle, receipt
receipt of cheques by the post/ mail and general receipt of cheques?
- there should be at least 2 persons who open the post and should review the details of the cheques
- mail register should be kept and must record the details
- both staff members who open th epost should sign the mail register in order to pin down responsibility
- they should hand the cheques received from the mail over to the cashier and cashier should sign register as a proof of receipt
- cheques should be inspected by the 2 staff members for any amendments/ endorsements
- there should be a company policy in place to reject amended cheques
- general manager should have copies of all client’s identity books/ proof of incorporations (contact details and address and there should be pre-approval before cheques are accepted as well as approval by the bank
perfect cycle, deposits
depositing cash receipts?
