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EFFECTIVE CONTROL

Effective control can be defined as all those measures

administrative measures that ensure permanent consistency in the treatment
of all and each of the operations generated by cash in hand and
banks, in order to inform the accuracy of their results.
These measures constitute the control of current assets.
Available, they must harmonize in their complexity according to character,
operational volume and importance of the company.
This type of control is also known as Internal Control,
since it is carried out at the company's request. The purpose or objective
the fundamental of internal control is:

The reduction of errors.

The reduction of loss risk and the achievement of fluency in its
management.
Accuracy and truthfulness of results.
Accuracy in financial information.
Accuracy in financial forecasts.
Prevent fraud.
Encourage compliance with the company's rules.

Internal control measures are based on this principle:

The internal confrontation of the cash operation reports is
confrontation is achieved through the application of the following rules:

A proper division of labor.

Clear assignment of responsibilities.
A delegation of authority by area.
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CONTROL PROCEDURE: they are the activities established by the

company, in order to provide and safeguard its interests.

These procedures are applicable to:

To the cash in the main drawer
In the fixed background
To deposits in financial institutions

CONTROL APPLICABLE TO CASH IN THE MAIN CASH REGISTER

In general, we can point out that the controls applicable to the cash box
mainly can be divided into three groups:
a) Control applicable to income.
b) Control applicable to expenses.
c) Balance control.

a) THE CONTROL OF INCOME: it is the confrontation of the daily report

cash register - in the revenue area - with the reports submitted by
the departments of the company that gave rise to those
income.

We can cite an example:

Income from collection of outstanding invoices. Collection reports

Report of collectors
Income from cash invoice collections. Sales reports
Sales reports
Warehouse reports of
merchandise.

b) THE CONTROL OF EXPENSES: these are the measures taken to

ensure that all cash receipts have been deposited in
the open accounts of the company with the institutions
financial.
This measure is implemented through a permanent measure
verification of the cash report with its corresponding
deposits. Permanent verification of the authenticity of the
deposit receipts regarding the date, amount, details
of its content - effective and check relationship, among others.
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c) THE CONTROL OF BALANCES OF THE CASH REPORT: is periodic

findings of its veracity with the physical existence of money
in the possession of the cashier; this act is called Cash Register Audit

THE CONTROLS APPLIED TO THE PETTY CASH

They are based on the permanent monitoring of the rules
established by the company in the creation of the Fixed Fund. This control
it is felt every time a Fund Replenishment is prepared, in
the frequent Cash Counts that are performed.
The minimum requirements for control measures are based on
en:
Minimum payment.
Nature of the payment.
Payment approval.

THE CONTROL APPLIED TO DEPOSITS IN INSTITUTIONS

FINANCIAL.
Due to the nature of demand deposits, we can classify the
control measures in four major groups:
Control of Income or Deposits.
Check and/or authorization control.
Control of Debit and Credit Notes.
Balance control.

THE CONTROL OF INCOME OR DEPOSITS: is carried out through the

confrontation of figures with the Caja report - expenses, with its
corresponding deposit slip and the records of it.
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ELEMENTS USED IN THE CHECK PAYMENT PROCEDURE

FOR YOUR CONTROL
By adopting the payment procedure by checks, it becomes necessary to
inclusion of a series of elements such as:
a) An Auxiliary Cash Journal.
b) An Auxiliary Cash Out Diary.
c) The creation of a Petty Cash Fund or Petty Cash, to make
the interior cash payments.

This control is based on independence, autonomy and

responsibility of the different officials involved, from the
request for its issuance up to delivery to the beneficiary.
Remember that control is to compare figures from different sources and the
same probative power.
The signatures that formalize and give value to the check before third parties must be
at least two, and in a joint manner, of officials
highly qualified and responsible in the organizational structure of the
company.

THE CONTROL OF DEBIT NOTES AND CREDIT NOTES.

Debit and credit notes are documents issued by the
financial institutions in order to report decreases or increases
of funds, this is information that the company is aware of
moment to receive them. To have effective control over them, you must
to exist fluency in communications between the financial institution and the
company, and a timely review of these documents.

Let's point out some examples:

The bank directly pays the interest earned by

fixed-term investments of the company, and at this moment they
issue a Credit Note.
With the company's permanent authorization, the bank
cancels a fixed assignment to a retired official and in this
At that moment a Debit Note is issued.
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It is worth noting that in many of these Debit Notes and

Credit, which is made periodically and without alternations, the record
accounting is automatic in the company and in the financial institution, and the
The document issued only serves to confront the accuracy of both.
records.

THE CONTROL OF BALANCES.

It is the absolute and general control of all the operations recorded by

the company and by financial, banking and/or credit institutions.
These last ones issue a relationship of their records, which is called
Account Statement and that responds to all income documents
registered by the company. Its confrontation is called Reconciliation.

EVASION OF CONTROL
The countless cases of evasion of control make the direction of
the company, at all its levels, maintains and applies meticulous zeal
in cash management.
Implementation of appropriate control procedures.
Selection of suitable personnel.
Crossing and comparing information about nutrition of the
cash.
Maintenance and proper control of its physical existence.

Cases of evasion from control can be classified according to their causes.

classify as:
Involuntary negligence of the person responsible for cash handling,
due to lack of internal control.
Willful negligence of the person responsible for cash handling,
based on the lack of internal control.
Voluntary negligence of the person responsible for cash handling,
using fraudulent procedures that distort control
internal applied.
FALSIFIED CASH BALANCE.
It is the irregular procedure of altering the Balances of the Balance Sheet
Situation, through an intentional planning of accumulation, to
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a given date of income and/or expenses, when using a presentation

delay in the Cash Report.
This irregularity is achieved in the following way:
The person responsible for the main cash register, as of the closing date of the fiscal year
economic, halts the submission of the daily report, and its corresponding
registration, in this way you can accumulate, partially or totally the
incomes from the following days.
In this way, the balance sheet presents inaccurate balances, as
irrationally increase the company's balance and alter in the
same proportion real accounts and/or income statements of any
way is an administrative attitude to falsify the statements
financial, and make a fraudulent presentation for those who
they plan actions on them:
If the income taken from the following days comes from accounts
to be collected, the irregular planning objective aims to reduce
the cost of sales, increase the profit or decrease the loss in
against an unreasonable presentation of accounts, cash and warehouse or
inventory
THE FUNDS CENTRIFUGE.
It is a fraudulent action covered by the delay in the submission of the
The daily cash report consists of taking the funds entered in the
subsequent days, to cover the cash withdrawal of the day
related
THE OVERDRAFT.
It is the use of the effective funds available from the company in
access or its capacity. Its presence is observed in availability
banking, in this last presentation two types of overdraft.
The planned turnaround is the uncontrolled issuance of checks and the
control of its delivery to the beneficiary. This situation is due to
emergency reasons, due to lack of accounting control of balances such as
or to change the reasonableness in the presentation of the statements
financial. Any mentioned situation is the least
convenient for the company, by virtue of the planning of
payments is the most effective forecast to prevent the shortage of
control or deviation thereof at a specific moment.
The authorized overdraft: it is the authorization granted by the bank
to temporarily rotate the account. It is practically
a credit operation that responds in its limit to that set by the
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maximum by the bank or as a variable by the company in its use

This is a normal operation in the financial world.

THE NATURE OF OVERDRAFT

We know that the nature of cash in hand and bank
especially the bank balance is a liquid current asset available. Its
the balance is debit.

Since the overdraft is a temporary and emerging situation for the

company automatically transformed the balance, for having disposed
of a larger sum of cash that the company possesses.
Balance as of 05/22/2015 700.00
28/06/15 deposit 300.00 1,000.00
28/06/15 check 1,200.00 200.00
In this balance, the mentioned change from positive to
negative, indicating with ( ), when issuing check xxxxxx for Bs 1,200.00
when our availability was Bs 1,000.00
The amount of Bs 200.00 negative or creditor is practically a debt.
from the company to the bank, and for this characteristic, it is accounted
give the same treatment.

FUND TRANSFER.
It is the transfer of available cash in a checking account of a bank.
to another account of the same bank or to another bank. Either through
checks or standing and/or temporary orders, in the latter
In this case, the transaction support consists of debit notes and
credits that are received later
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