Accounting Help!!!?

Question

Explain how companies can benefit from assessing their internal control procedures. How can internal control procedures be used to effectively safeguard a company’s cash? Explain.

Answer 1

A good system of internal control will usually help a company achieve its objectives of profitability and minimize loss of resources. Internal controls cannot, however, change an inherently weak management system or provide absolute assurance as to the reliability of financial reporting. Internal control initiatives must start at the top of the organization to be effective.

Safeguarding of cash - internal control procedures

* Separate, lockable containers or compartments should be available to each person collecting money. The money should be locked when the cashier is not available. Keys to the cash box should be limited only to the cashier and the supervisor.
* Checks should be restrictively endorsed upon receipt.
* Cash counting area should be reasonably secure and free of interruptions.
* Cash should be kept in a safe or locked drawer overnight.
* Cash should be deposited weekly or immediately when the amount on hand exceeds, say, $50.00
* Safe combination should be changed regularly. The safe should be physically suitable for its purposes.