Tuesday, 20 September 2011

Describe a suitable control system over cash receipts and payment

In the business there is a greater risk of cash misappropriation. So there is a need of safety measures.
Following system may be adopted to control over cash receipts.

1. Writing Of Ledger :-
The cashier should not write the ledger. It should be written by other person. Cashier should not have control over the ledger.

2. Presence Of Officer :-
All incoming letters should be opened under the supervision of a reasonable officer.

3. Cheques Should Be Crossed :-
All the crews and coins in the post must be crossed and noted in the diary and then delivered to the cashier.

4. Comparison :-
The cash book must be compared with the diary. Cash book and pass book entries should be reconciled.

5. Issuance Of Receipt :-
A printed serially numbered receipt should be issued for the amount received.

6. Counter Foil :-
Receipt of money should be in duplicate or its counter foil must be prepared and kept for reference unused receipt books must be kept safely.

7. Daily Deposit :-
All the receipts of cash and cheque must be deposited on the same day or next morning.

8. Use Of Cheque :-
For the payment received cash may not be used. Always cheques should be used for payment.

9. Sound System Of Cash Sale :-
There should be a sound system of cash sale. Recording method of cash sales should be well organized.

10. Collection Of Cash By Agents :-
Three copies of cash receipts should be prepared by the agent. One should be given to the pay. Second should be sent to office and third should be kept by the agent. Agent should also be paid by the cheque.

11. Statement Should Be Sent For Confirmation :-
For the confirmation balance statements of accounts should be sent with regular intervals to the debtors. It will also reduce the chances of frauds.


1. Use Of Cheque :-
Cheques should be used for all the payments except the petty cash. It is the first measure for internal control in case of payments.

2. Use Of Crossed Cheque :-
Before dispatching the cheques these should be crossed. So any other person may not draw the amount.

3. Safety Of Cheque Books :-
Blank cheque books should be under the safe custody of the responsible official. So that these may not be misused for payment by any fraud.

4. Entry In Cash Book :-
Payment should be recorded in the cash book as the payment is made.

5. Authorized Signature :-
Those persons should sign on the quiches who are authorized to sign.

6. Verification Before Signature :-
Before signing the cheque one should verify the documentary evidence for the payment like voucher, invoice or bill.

7. Special Nature Payment :-
Director of the company may sanction the payment special nature. Cashier has no authority to do so.

8. Vouchers Importance May Not Be Ignored :-
For every payment voucher should be obtained. Vouchers should b numbered and filed. Their number should be noted in the cash book against the payment entry.

9. Reconciliation :-
A responsible officer should reconcile the cash book with the bank statement time to time.

10. Wages Sheet Preparation :-
While preparing the wages sheet, internal control system should be applied to prevent fraud.


Post a Comment

Google+ Followers

  © Blogger template Blue Surfing by Trade Cycle 2014

Back to TOP