Internal Controls Overview

Cash

This information applies if a department handles cash. (Note: Cash is defined as currency, coins, checks, money orders, and credit card transactions.)

Segregation of Duties - With proper segregation of duties among employees, no one person has complete control over a transaction. This is one the most important steps to take in order to protect cash and employees.

Suggested Practices - Have Different Individuals

• Receive and deposit cash
• Record cash payments to receivable records
• Reconcile cash receipts to deposits and the official records
• Bill for goods and services
• Follow-up on the collection of returned checks
• Distribute payroll or other checks

(Note: It is important to try to minimize the number of people who actually handle cash before it is deposited, while still adequately segregating duties.)

Potential Consequences of Not Segregating Duties

• Concealed errors or irregularities go unchecked
• Lost or stolen cash receipts
• Cash receipts are not applied to the proper account

Accountability, Authorization and Approval - Accountability ensures that cash is accounted for, properly documented and secured, and traceable to specific cash handlers.

Answer the four "W's"

• Who has access to cash
• Why they have access to cash
• Where is cash at all times
• What has occurred from the transaction's beginning to end

Suggested Practices

• Record cash receipts when received
• Keep funds secured
• Document transfers
• Give receipts to customers
• Do not share passwords
• Give each cashier a separate cash drawer
• Supervisors verify cash deposits
• Supervisors approve all voided refunded transactions

Potential Consequences If Accountability Does Not Exist

• Lost or stolen cash receipts
• Cash receipts are not applied to the proper account
• Improper use of ASU assets

Security of Assets - All resources need to be physically protected, including the cash handlers.

Suggested Practices

• Conduct a background check on cash handlers
• Ensure physical layout provides sufficient security
• Restrict access to cash to as few people as possible
• Lock cash in a secure location, like a safe or locked storage facility
• Only authorized personnel should have keys, combinations and passwords
• Change keys, combinations and passwords when someone leaves
• Minimize the amount of cash held overnight
• Count cash in a non-public, secure area

Potential Consequences If Assets Are Not Adequately Secured

• Unsafe work environment
• Lost or stolen cash receipts
• Loss of liability insurance coverage

Review and Reconciliation - Confirm that transactions are recorded correctly. Monthly reconciliations of bank statement and cash records provide a good checks and balances.

Suggested Practices

• Compare receipts to deposit records
• Record cash receipts when received
• Count and balance cash receipts daily
• Perform periodic surprise cash counts

Potential Consequences If No Review And Reconciliation

• Errors, discrepancies or irregularities are not detected
• Lost or stolen cash receipts
• Cash receipts are not applied to the proper account