Segregation of duties

Cash/cheques are received by an individual outside of
the finance team

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

You may be responsible for counting cash (supervised by another person) and ensuring it reconciles to the amount of cash you’d expect to have.

Qs: Can someone define segregation of duties?

Qs: How might we segregate duties in the cash receipts process?

Documentation

Receipts are issued for each payment

Carbon copy receipts are used to ensure that the customer and company’s receipts are identical

Junior accountants often assist with the preparation of invoices and customer receipts. Again, very important that all documentation is accurate and agrees to each other.

Qs: Can someone define documentation? Why is it important?

Qs: How might we use documentation in the cash receipts process?

Physical controls

A limited number of individuals have access to the petty cash safe or the bank accounts

It is common for certain employees to have access to deposit cash in a bank account but cannot withdraw cash

Qs: Can someone define physical controls? Are they usually preventative or detective?

Qs: How might we use physical controls in the cash receipts process?

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

Junior accountants often prepare reconciliations which are then reviewed by their managers (independent checks of performance).

A final concept we’ll look at is month-end reconciliations.