Accounting Systems, Internal Controls, and Cash

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Accounting Systems, Internal Controls, and Cash
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Accounting Systems

• Why do we Account for things?
• What is the purpose of Acct Systems?
• Provide Information
• Provide Control

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What Is Internal Control?

• How do you define Control?
• What do you find most difficult to Control? Why?

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Internal Control

• Policies and Procedures that provide reasonable
  assurance that
• Assets are safeguarded and used for business
  purposes.
• Business information is accurate.
• Employees comply with laws and regulations.
• Why Reasonable?

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Internal Control Components

• Internal control model has five crucial
  components
• Control environment
• Control Procedures
• Separation of Responsibilities
• Risk Assessment
• Information and Communication
• Monitoring

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Separation of Responsibilities

• Responsibility for related business operations
  should be divided among two or more persons.
• Accounting / Recording
• Custody of Assets
• Operations / Authorization

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Separation of Responsibilities

• Examples of Related Business Operations.
• Authorizing Credit Sales
• Recording Sales Cash Receipts
• Shipping Handling Products
• Handling Cash Receipts

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Whats So Important About Controlling Cash?

• CASH is KING
• Everybody Wants It Valuable
• Easy to Transfer Cash, Card, Check
• Easy to Consume

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Common Cash Controls

• Separation of Duties
• Cash Handling (Cashier Department)
• Cash Recording (Accounting Department)
• Cash Authorizations (Management)
• Restrictive Endorsements (For Deposit Only)
• Daily Deposits Validated Deposit Slips
• Limited Cash On Hand
• Independent Bank Reconciliations
• Monitor Cash Related Transactions (Refunds)
• Limited Access to Blank Checks

How does UCA handle Cash Receipts?
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Want to Know More?

• The World Wide Web has an immense collection of
  documents related to Internal Control,
  Segregation of Duties and the handling of cash
  related transactions. Many of these documents
  represent the actual policies and procedures used
  by major companies and universities. Simply, get
  on Google and type in your key words. Here are a
  few informative sites.

• How does UCA handle Cash Receipts?
• http//www.uca.edu/divisions/admin/finserv/cash/ca
  sh_handling_procedures.pdf
• Cash Controls U. of CA - San Diego
• http//www-bfs.ucsd.edu/cashier/sd.html
• Controls Tip Sheet U. of CA Santa Cruz
• http//www.ucsc.edu/finaff/cc/tips/sepduty.htm

• INTERNAL CONTROL U. of New York
• http//www.brockport.edu/hr/CTRL.HTM
• Control Guide for Managers Virginia Tech
• http//www.ams.vt.edu/control.html