Segregation of duties

Cash/cheques are received by an individual outside of Finance

Cash/cheques are counted by two individuals, who are independent of the individual who makes the bank deposit and records
the journal entries

Month-end bank reconciliations

Compare cash balance per accounting system to cash balance per bank statement

All material differences are investigated and any correcting accounting entries are posted

Must be done on a timely basis to be effective

1 – Segregation of duties is very important here, as we saw in our example

-The process will be slightly different in each org but typically need cash to be received from someone outside of finance

-Then there should be a count / deposit by someone who does not record the transactions

2 – Bank reconciliations

–Typically if your cash does not balance something is wrong!

-We’ll see that bank reconciliations are commonly used to ensure any transaction that involved cash was properly recorded

Qs: Is anyone here responsible for bank reconciliations? Can you describe the process for us?

-Key aspect of reconciliations is timeliness – control is not very effective a long time after the fact as cash is long gone but also more and more difficult to reconcile if many different transactions have taken place since the problematic item