Revenue/Receipts- Cash

Question 1

What are the separation of duties with respect to cash receipts?

Answer 1

• Each cash receipt is listed immediately when mail is opened (and restrictively endorsed)
• Different personnel should handle accounting actives, prepare the deposit, and reconcile the bank accounts

Question 2

What are the controls (physical controls) with respect to cash receipts?

Answer 2

Access- limit direct & indirect access

• Employees with access to cash receipts should be “bonded” – a background check)
• Limit access to cash and key documents to authorized personnel (includes passwords)
• Could use a lockbox where customers make payments that are picked up directly by the bank (via a Post Office box) instead of going to the entity’s mailroom

Question 3

What are the authorization of transactions with respect to cash receipts?

Answer 3

Transactions should be executed as authorized:
- Bank reconciliation should be reviewed and approved (with that approval document)

• Any adjusting entries should be reviewed and approved by appropriate management

Question 4

What are the review (performance reviews) with respect to cash receipts?

Answer 4

Initial cash receipt listings should be compared to total cash receipts journal

Cash receipts should be deposited daily and to facilitate comparisons of receipt and deposits

Question 5

What are the EDP/IT (information processing) controls with respect to cash receipts?

Answer 5

All “key” documents should be pre-numbered and the number sequence should be properly accounted for