Sarbanes-Oxley, Internal

Control, and Cash

MULAIQOTUR R 1211800132
LAILATUL M 1211800277
 BANK ACCOUNT
A Major reason that companies use bank accounts
is for internal control. Some of the control
advantages of using bank accounts are as follows:
1. Bank accounts reduce the amount of cash on
hand.
2. Bank accounts provide an independent recording
of cash transactions. Reconciling the balance of
the cash account in the company’s records with
the cash balance according to the bank is an
important control.
3. Use of bank accounts facilitates the transfer of funds
using EFT system
 BANK STATEMENT
A summary of all transactions, called a bank statement, is
mailed, ussualy each month, to the company
(depositor) or made available online.
A bank makes credit entries (issues credit memos) for the
following:
1. Deposits made by electronic fund transfer (EFT)
2. Collection of note receivable for the company
3. Proceeds for a loan made to the company by the bank
A bank makes debit entries (issues debit memos) for the
following:
1. Payment made by electronic funds transfer (EFT)
2. Service chargers
 BANK RECONCILIATION
A bank reconciliation is an analysis of the items and
amounts that result in the cash balance reported in the
bank statement to differ from the balance of the cash
account in the ledger.
A bank reconciliatoin is usally divided into two sections as
follows:
1. The bank section begins with the cash balance
according to the bank statement and ends with the
adjusted balance.
2. The company section begins with the cash balance
according to the company’s records and ends with the
adjusted balance.
SPECIAL-PURPOSE CASH FUNDS

A petty cash funds is established by estimating the

amount of payments needed from the fund during a
period, such as a week or a month.
The petty cash fund is normally replenished at periodic
intervals, when it is depleted, or reaches a minimum
amonunt. When a petty cash fund is replenished, the
accounts debited are determined by summarizin the
petty cash receipts.
 FINANCIAL STATEMENT
REPORTING OF CASH
Cash is normally listed as the first assets in the Current
Assets section of the statement of financial position.
Most companies present inly a single cash amount on
the statement of financial position by combining all
their bank and cash fund accounts.
FINANCIAL ANALYSIS AND
INTERPETION:
RATIO OF CASH TO MONTHLY
CASH EXPENSES
 In such cases, the ratio of cash to monthly cash
expenses is useful for assessing how long a company
can continue to operate without:
1. Additional financing
2. Generating positive cash flows from operations