TOPIC 46 - INTERNAL CONTROLS OVER BANK & CASH

Transcription

1 TOPIC 46 - INTERNAL CONTROLS OVER BANK & CASH Firstly, lets lk at the cntrl risks/bjectives and the assciated cntrl activities fr cash payments. Cntrl Objective T ensure that nly valid cash payments are made Cntrl Activity Supplier statements independently reviewed and recnciled t trade payable recrds Mnthly Bank Recnciliatins prepared and reviewed Only authrised staff can make electrnic cash payments and issue cheques Electrnic cash payments and cheques prepared nly after all surce dcuments have been independently apprved. T ensure that all cash payments that ccurred, are recrded Supplier statements independently reviewed and recnciled t trade payable recrds Mnthly Bank Recnciliatins prepared and reviewed Review f cash payments by manager befre release Daily Cash Payments recnciled t psting t payable accunts Use f pre numbered, sequentially rdered cheques (Arithmetical & Accunting Cntrl) 1

2 1. T ensure that cash payments are recrded crrectly in the accunting recrds 1. Recnciliatin f daily payments reprt t electrnic cash payment transfers and cheques issued 1. Supplier statements recnciled t payable accunts regularly 1. Mnthly bank recnciliatins f bank statements t cash bk 2. T ensure that cash payments are psted t the crrect payable accunts and t the general ledger 2. Supplier statements recnciled t payable accunts regularly 2. Persnal Payable accunts recnciled t payable cntrl accunt in the nminal ledger T ensure that cash payments are recrded in the crrect accunting perid T ensure that cash payments are charged t the crrect accunts Recnciliatin f electrnic funds transfers and cheques issued with pstings t cash payments jurnal and payable accunts Independent apprval and review f general ledger accunt assignment 2

3 Nw, lets turn t the area f cash receipts Cntrl Objective T ensure that all valid cash receipts are received and depsited Cntrl Activity Segregatin f Duties Mnthly bank recnciliatins perfrmed and independently reviewed Use f cash registers, pint f sale devices; pneumatic capsule pipeline (Physical Cntrl) Mail pened by tw staff members Independent recnciliatin f cash/cheques t be depsited at bank with register ttals and receipts listing Independent recnciliatin f agreement f bank depsit slip with daily cash summary T ensure that all cash receipts are recrded Mnthly bank recnciliatins perfrmed and independently reviewed Daily cash receipts listing recnciled with psting t persnal receivables ledger Custmer statements prepared and sent ut n a regular basis 3

4 1. T ensure that cash receipts are recrded at crrect amunts 1. Mnthly bank recnciliatins perfrmed and independently reviewed 2. T ensure that cash receipts are psted t the crrect persnal receivables accunt and t the Receivables Cntrl Accunt 2. Mnthly custmer statements sent ut 2. Mnthly cash receipts jurnal agreed t amunt psted t the Receivables Cntrl Accunt 2. Ttal f persnal Receivables Ledger recnciled t the balance n the Receivables Cntrl Accunt T ensure that cash receipts are recrded in the crrect accunting perid T ensure that cash receipts are charged t the crrect accunts Bank recnciliatin at perid end Cdes in place fr different types f receipts 4

5 Additinal Ntes - The Cash System Aims f Cntrls All mnies received are recrded All mnies received are banked Cash and cheques are safeguarded against lss r theft All payments are authrised, made t the crrect payees and recrded Payments are nt made twice fr the same liability Cntrls ver the cmpleteness f recrding f cash receipts are particularly imprtant. If these cntrls are inadequate, there may be insufficient audit evidence available when the auditr carries ut substantive prcedures Segregatin f duties is als imprtant. The persn respnsible fr receiving and recrding cash when it arrives in the pst shuld nt be the same as the persn respnsible fr banking it. Ideally the cash bk shuld be written up by a further staff member, and a furth staff member shuld recncile the varius recrds f amunts received. Cntrls: Cash at Bank and In Hand - Receipts Segregatin f Duties between the varius functins listed belw is particularly imprtant. Recrding f receipts by pst Safeguards t prevent interceptin f mail between receipt and pening Appintment f respnsible persn t supervise mail Prtectin f cash and cheques (restrictive crssing) Amunts received listed when pst pened Pst stamped with date f receipt Recrding f cash sales and cllectins Restrictins n receipt f cash (by cashiers nly, r by salesmen etc) Evidencing f receipt f cash Serially numbered receipt frms Cash registers incrprating sealed till rlls Clearance f cash ffices and registers Agreement f cash cllectins with till rlls 5

6 Agreement f cash cllectins with bankings and cash and sales recrds Investigatin f cash shrtages and surpluses General Cntrls ver Recrding - Prmpt maintenance f recrds (cash bk, ledger accunts) - Limitatin f duties f receiving cashiers - Hliday arrangements - Giving and recrding f receipts - Retained Cpies - Serially numbered receipts bks - Custdy f receipt bks - Cmparisns with cash recrds and bank paying in slips Banking Daily Bankings Make up and cmparisn f paying in slips against initial receipt recrds and cash bk Banking f receipts intact/cntrl f disbursements Safeguarding f cash and bank accunts Restrictins n pening new bank accunts Limitatins n cash flats held Restrictins n payments ut f cash received Restrictins n access t cash registers and ffices Independent inspectins n cash flats Surprise cash cunts Custdy f cash utside ffice hurs Custdy ver supply and issue f cheques 6

7 Preparatin f cheques restricted Safeguards ver mechanically signed cheques/cheques carrying printed signatures Restrictins n issue f blank r bearer cheques Safeguarding f IOU s, cash in transit Insurance Arragements Cntrl f Funds held in trust fr emplyees Bank recncilaitins Issue f bank statements Frequency f recncilaitins by independent persn Recnciliatin prcedures Treatment f lngstanding unpresented cheques Stp payment ntice Sequence f cheque numbers Cmparisn with cash bks Cntrls: Cash at Bank and in Hand - payments The arrangements fr cntrlling payments will depend t a great extent n the nature f business transacted, the vlume f payments invlved and the size f the cmpany Cntrls: Cheque and Cash Payments Generally The cashier shuld generally nt be cncerned with keeping r writing up bks f accunt ther than thse recrding disbursements nr shuld he have access t, r be respnsible fr the custdy f securities, title deeds r negtiable instrutments belnging t the cmpany. The persn respnsible fr preparing cheques r traders credit lists shuld nt himself be a cheque signatry. Cheque signatries in turn shuld nt be respnsible fr recrding payments. Cheque Payments Cheque Requisitins Apprpriate supprting dcumentatin 7

8 Apprval by apprpriate staff Presentatin t cheque signatries Cancellatin (crssing/recrding cheque number n requisitin) Authrity t sign cheques Signatries shuld nt als apprve cheque requisitins Limitatins n authrity t specific amunts Number f signatries Prhibitins ver signing f blank cheques Prmpt dispatch f signed cheques Obtaining f paid cheques frm banks Payments recrded prmptly in cash bk and general and purchase ledger Cash Payments Tests f Cntrls Authrisatin f expenditure Limits n disbursements Rules n cash advances t emplyees, IOU s and cheque cashing Nte that as well as testing cntrls ver receipts, auditrs are als btaining evidence t supprt the assertin that sales and receipts are cmpletely recrded. Tests f Cntrl: Receipts received by pst 8

9 - Observe prcedures fr pst pening are being fllwed - Observe that cheques received by pst are immediately crssed in the cmpany s favur f the cmpany - Fr items entered in the rugh cash bk (r ther recrd f cash, cheques etc received by pst) trace entries t : - Cash Bk - Paying In Bk - Cunterfil r carbn cpy receipts - Verify amunts entered as received with remittance advices r ther supprting evidence Tests f Cntrl: Cash Sales, Branch Takings Fr a sample f cash sales summaries/branch summaries frm different lcatins: Verify with till rlls r cpy cash sales ntes Agree t paying in slip date stamped and initialled by the bank Verify that takings are banked intact daily Vuch expenditure ut f takings Tests f Cntrl: Cllectins Fr a sample f items frm the riginal cllectin recrds Trace amunts t cash bk via cllectrs cash sheets r ther cllectin recrds Inspect entries n cash sheets r cllectin recrds with cllectrs receipt bks Verify that gds delivered t sales staff have been regularly recnciled with sales and inventries in hand Inspect numerical sequence f cllectin recrds Tests f Cntrl: Receipts Cash Bk Fr cash receipts fr several days thrughut the perid: 9

10 Agree t entries in rugh cash bk, receipts, branch returns r ther recrds Agree t paying in slips btained direct frm the bank, cnfirming that there is n delay in banking mnies received Reperfrm additins f paying in slips Reperfrm additins f cash bk Agree pstings t sales ledger Agree pstings t the general ledger, including cntrl accunts Inspect the cash bk, and investigate items f a special r unusual nature Tests f Cntrl: Payments Cash Bk (authrisatin) Fr a sample f payments: Cmpare with paid cheques t ensure payee agrees Nte that cheques are signed by the persns authrised t d s within their authrity limits Agree t suppliers invices fr gds and services. Verify that supprting dcuments are signed as having been agreed and passed fr payment and have been stamped paid Agree t suppliers statements Agree t ther dcumentary evidence as apprpriate (agreements, authrised expense vuchers, wages/salaries recrds, petty cash bks etc) Tests f Cntrl : Payments Cash Bk (Recrding) Fr a sample f weeks: Inspect the sequence f cheque numbers and enquire int missing numbers Trace transfer t ther bank accunts, petty cash bks r ther recrds as apprpriate Inspect additins, including extensins, and balances frward at the beginning and end f mnths cvering the perids chsen Agree pstings t the purchase ledger Agree pstings t the general ledger, including the cntrl accunts 10

11 When checking the bank and cash are secured, auditrs shuld cnsider the security arrangements ver blank cheques. Bank recncialitins are als a very imprtant cntrl and auditrs shuld carry ut the fllwing tests n these Fr a perid which includes a recnciliatin date reperfrm recncialitin Verify that recncialitins have been prepared at regular intervals thrughut the year Inspect recncialitins fr unusual items Tests f Cntrl: Petty Cash Fr a sample f payments Agree t supprting vuchers Inspect vuchers t ensure prper apprval Inspect vuchers fr evidence f initials by the cashier t prevent their re use Fr a sample f weeks Trace amunts received t cash bks Agree additins and balances carried frward Agree pstings t the nminal ledger 11

12 Questin Shiny Happy Windws Cash System 12

13 SUGGESTED SOLUTION 13

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