Chapter 10
Cash Controls
290
Cash Control Guidelines
Cash is very important to a business and it can be tempting for employees to try and misuse cash.
Therefore, it is important to have rules for dealing with cash.The three rules shown below will be
discussed in detail.
1.
Record cash immediately when it is received.
2.
Protect cash when it is on the premises.
3.
Remove cash from the premises as soon as possible.
Record Cash Immediately when it is Received
After the receipt of cash is recorded, its movement through an organization should be tracked and
its removal detected and noted.
The method of recording cash depends on the size of the business and the systems used. For a small
business, a simple book of pre-numbered receipts will suffice. When the customer offers cash for
merchandise, a paper receipt is prepared in duplicate (one copy for the customer, and the other copy
retained as a permanent record of the receipt of cash). Proper controls include the recording of the
receipts. Receipts are issued in a sequential pre-numbered order and are accounted for on a regular
basis by a responsible staff member.The amounts shown on the receipts are totalled and compared
with the cash on hand on a daily basis.
An improvement to preparing receipts by hand is to use a cash register.The cash register prepares
two copies of the receipt, similar to handwritten receipts—one copy maintained in the cash register
and the second copy provided to the customer. As with handwritten receipts, individual sales
amounts are added and compared to the amount of cash on hand.
For larger companies, the cash register is replaced with a point-of-sale (POS) computer terminal.The
terminal connects directly with the company’s accounting system, but performs the same functions
as a handwritten receipt. Specifically, a receipt is given to the customer and a record is maintained in
the system.The sales are totalled and compared with the cash on hand on a regular basis.
All of the above systems require the participation of the customer. When the customer is handed
the receipt, he or she is expected to examine the receipt to ensure that it reflects the exact amount
of cash paid. If the amount on the receipt is less than the actual amount paid, the customer will
complain and a correction will be made, ensuring that the receipt for the correct amount is recorded.
The second feature of these systems is a regular summing-up of the sales amounts and comparison
of the total with the cash on hand. Cash shortages and overages are dealt with by management.
Cash should be deposited intact into a bank account. The total amount of sales should be the
amount deposited into the bank, without any deductions being made.
