Recommendations for Executive Actions in ensuring proper internal control on cash in hand and bank:

Recommended internal control on cash receipts: Basic Principle: No one person should be allowed to collect, handle or transport and deposit checks/cash without some additional control feature to ensure that all receipts of cash are accounted for. Examples of such controls are as follows: Maintain a log of all monies received. The log can be in manual or electronic format and should contain the amount received, the name of the payer, purpose of the payment and its form (cash or check). Provide a receipt. Ideally receipts should be pre-numbered and two-part. One copy should be provided to the payer while the other copy is kept on file. Total deposits can be verified independently by another person by accounting for each sequentially numbered receipt. A deposit slip should be prepared and forwarded with the cash/checks to Cash Operations. The deposit slips should be reconciled by a third person to the general ledger. Keep transfers of cash from person to person to a minimum. Accountability is lost when several people handle cash before it is deposited. If transfers must take place be sure to document it. If you are the transferor you should get a receipt, if you are the transferee you should verify what you are told you are receiving is actually what you are receiving before you provide a receipt. Use of a drop-off/pick-up log can be beneficial when transporting deposits. Restrictively endorse checks immediately upon receipt with a stamp stating For Deposit Only SLTS/SLMS. Keep cash/checks in a locked and secure area until they can be deposited. Access to the area should be restricted to only 2 people, one serving as a backup. If a person with custody responsibilities leaves their position, any keys should be collected or combinations changed. Remember that while cash or checks are in your custody you are responsible for it. Make timely deposits. The sooner you deposit cash/checks the less exposure to theft or loss of funds. Ideally deposits should be made within 24 hours. If amounts are insignificant (less than Tk.5,000/-) then deposits can be made weekly. Verify the deposit by agreeing Cash Operations deposit slip to the general ledger on a monthly basis. Duties should be segregated, meaning that the person recording the receipt should not be the same as that making the deposit. Additionally, a person independent of recorder and depositor responsibilities should reconcile the deposit to the general ledger. If there are only 2 people in the department, the reconciliation should be performed by the person collecting the receipts. Personal checks should not be cashed.

Fees and other Revenues: Basic Principle: Use an accounts receivable account to process billing and collection efforts. Internal controls surrounding this type of activity include: Maintain a subsidiary ledger of customer accounts, including all invoices and payments. Invoices should be pre-numbered. The total of all payments should be agreed to the associated revenue account monthly. The accounts receivable should be reviewed monthly for past due revenues. The subsidiary ledger should be agreed to the associated accounts receivable account monthly. All credits, adjustments, refunds should be properly documented and authorized by management prior to entry into the receivable records. Accounts to be written off should be properly approved by management. Duties should be segregated, in that the person recording the receivable should not also collect the receipts.

Bank Accounts: Basic Principle: Only signatories of company bank account should have access in operating bank account. Bank accounts are centrally authorized and monitored. They require approval by the signatories. Bank reconciliation should be done on regular basis (monthly reconciliation is recommended)

Recommended internal control on Cash Disbursement: The objectives of internal controls for cash disbursements are to ensure that cash is disbursed only upon proper authorization of management, for valid business purposes, and that all disbursements are properly recorded. Grantees will find this resource useful when maintaining internal control for cash disbursements. While it is impossible to guarantee that these objectives will be met at all times for all transactions, the following practices provide reasonable assurance that they will usually be accomplished. Separation of duties: One of the most important steps your unit can take to protect cash and you is to separate cash handling duties among different people. With proper separation of duties, no single person has control over the entire cash process. Best practice is to have different people: Receive and deposit cash Record cash payments to receivable records Reconcile cash receipts to deposits and the general ledger Bill for goods and services Follow up on collection of returned checks Distribute payroll or other checks

Note: The key to effective cash control while separating duties is to minimize the number of people who actually handle cash before it's deposited. Potential consequences if duties are not separated: Concealed errors or irregularities going unchecked Lost or stolen cash receipts Inaccurate application of cash receipts to department accounts Accountability, authorization, and approval

Cash accountability ensures that cash is accounted for, properly documented and secured, and traceable to specific cash handlers. When proper cash accountability exists, you can answer the four W's during a process: Who has access to cash Why they have access to cash Where cash is at all times What has occurred from the transaction's beginning to end

Best practices: Record cash receipts when received. Keep funds secured. Document transfers. Give receipts to each customer. Dont share passwords. Give each cashier a separate cash drawer. Supervisors verify cash deposits. Supervisors approve all voided refunded transactions.

Potential consequences if accountability does not exist: Lost or stolen cash receipts Inaccurate application of cash receipts to departmental accounts Improper use of University assets

Security of assets: Be sure to keep all of your resources physically protected, including your cash handlers. Follow these practices to promote a safe work environment when working with cash. Best practices: Conduct the proper background checks on prospective cash handlers. Follow physical layout standards prescribed by policy. Restrict access of cash to as few people as possible. Lock cash in a secure location like a safe or locked storage facility. Provide combinations, passwords only to authorized personnel. Change combinations, passwords annually, or when someone leaves. Minimize the amount of funds held overnight. Use a buddy system when taking funds from one location to another.

Count cash in a non-public area not easily visible to others

Potential consequences if cash is not secured: Unsafe work environment Lost or stolen cash receipts Loss of liability coverage with University insurance carriers

Review and reconciliation Your reconciliation activities confirm that you've recorded transactions correctly. Perform monthly reconciliations of cash receipts and bank account statements to provide good checks and balances. Best practices: Compare receipts to deposit records. Record cash receipts when received. Count and balance cash receipts daily. Perform periodic surprise cash counts.

Potential consequences if review and reconciliation activities are not performed: Errors, discrepancies, or irregularities not detected Lost or stolen cash receipts Inaccurate application of cash receipts to department accounts

We recommend to use Internal Accounting Controls Checklist for future uses to test control: The following questions reflect common internal accounting controls related to paying bills. You may wish to use this list to review your own internal accounting controls and determine which areas require further action. Are all disbursements, except those from petty cash, made by pre-numbered checks? Are voided checks preserved and filed after appropriate mutilation? Is there a written prohibition against drawing checks payable to Cash? Is there a written prohibition against signing checks in advance? Is a cash disbursement voucher prepared for each invoice or request for reimbursement that details the date of check, check number, payee, amount of check, description of expense account (and restricted fund) to be charged, authorization signature, and accompanying receipts? Are all expenditures approved in advance by authorized persons? Are signed checks mailed promptly? Does the check signer review the cash disbursement voucher for the proper approved authorization and supporting documentation of expenses? Are invoices marked Paid with the date and amount of the check?

Are requests for reimbursement and other invoices checked for mathematical accuracy and reasonableness before approval? Is a cash disbursement journal prepared monthly that details the date of check, check number, payee, amount of check, and columnar description of expense account (and restricted fund) to be charged? Is check-signing authority vested in persons at appropriately high levels in the organization? Are the numbers of authorized signatures limited to the minimum practical number? Do larger checks require two signatures? Are bank statements and canceled checks received and reconciled by a person independent of the authorization and check signing function? Are unpaid invoices maintained in an unpaid invoice file? Is a list of unpaid invoices regularly prepared and periodically reviewed? Are invoices from unfamiliar or unusual vendors reviewed and approved for payment by authorized personnel who are independent of the invoice processing function? If the organization keeps an accounts payable register, are payments promptly recorded in the register to avoid double payment? If purchase orders are used, are all purchase transactions used with pre-numbered purchase orders? Are advance payments to vendors and/or employees recorded as receivables and controlled in a manner which assures that they will be offset against invoices or expense vouchers? Are employees required to submit expense reports for all travel related expenses on a timely basis?