Internal Controls for Cash - Financial Accounting

All right,

let's talk about some examples for internal controls just for cash.

OK.

There's

some pretty straightforward ones.

Effective

internal control

will

protect cash,

and they should meet three guidelines,

OK?

These are what the,

what you should follow when you're

creating

examples of internal controls just specifically for cash.

One is I want to handle cash or the handling of cash

is separate from the recordkeeping.

Again,

that's the most common one is separation of duties.

I don't want the person with custody of it to be

also the one that's doing the record keeping of it.

Again,

you're gonna hear this so many times

this

is just a very important one.

Another one is cash receipts are promptly deposited in the bank.

I don't want to have a lot of cash on hand

that opens the door for theft internally or theft externally

with people coming in and maybe robbing me or something.

When I have cash on hand,

I want to take it to the bank as quickly as I can.

Typically,

you're gonna have...

Well, some

businesses do it twice a day

or at least once a day.

And

then finally,

cash disbursements are made by check or EFT.

Why check or EFT? Because I have

a number that's associated with it.

I don't want to just give somebody cash

because if I give somebody cash,

they can dispute and it's my word over theirs.

I would much rather give them a check,

so I have that paper trail to go back to see who endorsed it,

who,

you know,

cashed it,

who was paid to and all that.

So, those are three

very important guidelines when it comes to

controlling your cash,

internal controls for cash.

Appreciate it.