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The document outlines internal control principles for cash handling, emphasizing the importance of segregation of duties, authorization, and accountability. Key practices include designating one employee to receive cash, having a different employee deposit it, and requiring managerial oversight for reconciliation. These measures aim to minimize risks of theft, fraud, and errors in cash transactions.

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bashirgishe
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7 views1 page

Homework

The document outlines internal control principles for cash handling, emphasizing the importance of segregation of duties, authorization, and accountability. Key practices include designating one employee to receive cash, having a different employee deposit it, and requiring managerial oversight for reconciliation. These measures aim to minimize risks of theft, fraud, and errors in cash transactions.

Uploaded by

bashirgishe
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

The internal control principles suggested in the diagram are: 1.

Just one employee receives


cash: This principle ensures that there is a designated individual responsible for receiving cash,
reducing the risk of theft or mismanagement. 2. Cash receipts are summarized and their total is
calculated: This principle involves accurately documenting and calculating all cash receipts,
which helps in tracking the inflow of cash and detecting any discrepancies. 3. A different
employee deposits cash in the bank: Having a separate employee responsible for depositing
cash in the bank provides an additional layer of security and accountability in handling cash
transactions. 4. The bank stamps the deposit slip: This step ensures that the deposit is officially
recognized by the bank, verifying the accuracy of the transaction and reducing the likelihood of
fraudulent activities. 5. A manager compares 2 with 4: This principle involves managerial
oversight where a manager compares the summarized cash receipts with the stamped deposit
slip to ensure that all transactions are properly recorded and accounted for. 6. No other
employees are allowed to handle cash: Restricting the handling of cash to only designated
employees minimizes the risk of errors, fraud, or theft in the cash handling process.

1. Segregation of duties: Just one employee receives cash, indicating that there is a clear separation of
duties between handling cash and other tasks.

2. Authorization and approval: Cash receipts are summarized and their total is calculated, indicating that
there is a process in place to authorize and approve the cash receipts.

3. Separation of duties: A different employee deposits cash in the bank, indicating that there is a
separation of duties between handling cash and making bank deposits.

4. Documentation and records: The bank stamps the deposit slip, indicating that there is a process to
document and record the bank deposit.

5. Reconciliation and review: A manager compares the cash receipts total (from step 2) with the stamped
deposit slip (from step 4), indicating that there is a process to reconcile and review the cash transactions.

6. Limited access: No other employees are allowed to handle cash, indicating that there are restrictions
on who can handle cash, promoting security and accountability.

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