This document contains Erika Mae L. Briones' assignment on internal controls, providing examples of internal controls for various processes. It lists internal controls for cash receipts, cash disbursements, sales, receivables, purchases, accounts payable, inventory and production, payroll and personnel, and investing. The internal controls focus on segregation of duties, authorization processes, documentation, reconciliation, security measures, and regular audits to safeguard assets and ensure accurate record keeping.

1. NAME: ERIKA MAE L. BRIONES
YR & SEC: BSA 3B
DATE: 11/14/22
ASSIGNMENT ON INTERNAL CONTROL
1. Give atleast (5) internal control for Cash Receipts
A. Cash registers and credit card machines should be balanced daily.
Over/short amounts should be monitored.
B. Keep cash/checks in a locked and secure area until they can be
deposited. Access to the area should be restricted to only designated individuals. 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.
C. Make timely deposits. The sooner cash/checks can be deposited,
the less exposure to theft or loss of funds. Ideally deposits should be made within 24
hours.
D. All cash receipts should be recorded immediately by use of a cash
register, data entry into a computing system, pre-numbered receipt book, or handwritten
log. Receipts 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/
check/credit card).
E. 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.
2. Give atleast (5) internal control for Cash Disbursements
A. SEGREGATION OF DUTIES- The foundation of a good internal
control system is segregation of duties. The duties of authorization (signing a check or
releasing a wire transfer), custody (having access to the blank check stock or the ability
to establish a wire transfer), and recordkeeping (ability to record the transaction in the
accounting system) should be separated so that one individual cannot complete a
transaction from start to finish. The concept behind segregation of duties is that in order
to misappropriate cash, individuals would have to collude, rather than one individual
acting alone.
B. REVIEW AUTHORIZED SIGNORS -. Carefully consider who your
authorized signors are (authorization of the transaction). Those individuals should not
have access to the blank check stock (custody of the asset) nor the ability to enter the
transaction into the accounting system (recording of the transaction). The use of a
signature stamp, although efficient, may be problematic in that you must have separate
controls to ensure that the stamp is not readily available for inappropriate use.
C. CONSIDER DUAL SIGNATURES - Your company may also want to
consider the use of dual signatures as a further internal control for cash disbursements.
A dual signature policy includes the establishment of a dollar threshold over which
checks require two signatures. The utilization of dual signatures establishes an element
of segregation of duties for disbursements over a specified threshold in that these
disbursements require more than one individual to authorize the transaction.

2. D. REMEMBER THE WIRE TRANSFERS- The use of wire transfers
has increased significantly over the years, and segregation of duties around wire
transfers is paramount. The responsibilities for establishing a wire transfer should be
segregated from the responsibility of releasing the wire transfer. If this segregation is
not possible, consideration should be given to using a call-back procedure, in which the
financial institution will call a specified individual when a wire transfer is initiated.
E. RECONCILE BANK ACCOUNTS IN A TIMELY MANNER - The bank
reconciliation should be completed in a timely manner by someone who is independent
of the cash disbursement process. The bank reconciliation should also include a review
of the bank statement and the check images that are returned with the bank statement
for unusual transactions. Any unusual items should be investigated and evaluated when
necessary.
3. Give Atleast (5) internal control for Sales
A. Sales invoices are reconciled to the daily sales report.
B. All shipping documentation is forwarded to the invoicing section on
a daily basis.
C. Codes in place for different types of products or services.
D. An open-order file is maintained and reviewed regularly.
E. Shipping documentation is matched to sales invoices.
4. Give Atleast (5) internal control for Receivables
A. Segregate the duties of staff. Have different people deal with
invoicing, accounts receivable, cash collection, and the review and reconciliation of
accounting records.
B. The business should have well documented policies and procedures
on accounts receivable internal controls such as credit and collection policies, to ensure
that all staff understand the accounts receivable process.
C. Compare the sales order and purchase order
D. Reconcile the goods dispatched to the customer to the quantities
shown on the sales invoice.
E. Post the accounts receivable ledger from a copy sales invoice as
soon as the transaction occurs, and file unpaid invoices in invoice date order to ensure
invoices are not paid late.
5. Give Atleast (5) internal control for Purchases
A. All goods received reports forwarded to accounts payable
department daily.
B. Procedures in place that require recording of purchases as soon as
possible after goods/services received.
C. Amount posted to general ledger is reconciled to the purchase ledger
D. Purchase orders and GRNs are matched with the suppliers’ invoices.
E. Mathematical accuracy of the supplier‘s invoice is verified.

3. 6. Give Atleast (5) internal control for Accounts Payables
A. SEGREGATION OF DUTIES - Segregation of duties is present
when there is a separate person for initiating payments and authorizing payments in the
system. Similarly, if your business makes paper check payments, there should be one
person who prepares the check and another person who signs the check. By doing so,
you can mitigate fraud, theft, or the possibility of having one person taking too much
control over the process. Having multiple eyes on an invoice can also help to catch a
last-minute payment or entry error.
B. MANUAL CHECK SIGNING AND DOUBLE SIGNING- It’s a best
practice to manually sign a check rather than using a stamp or signature stamp that
could fall into the wrong hands. It’s also a good idea to have more than one person sign
a check – especially if the payment exceeds a certain amount. These steps reduce the
risk of error, fraud, and duplicate payments. And when using an automated system like
MineralTree, customers don’t even have to write or sign checks – it’s safely done on
their behalf.
C. SECURE CHECK STORAGE- All physical checks should be stored
in a lockbox to maximize protection and to avoid fraud. Additionally, all signature plates
and stamps should be stored in a secure location to eliminate the risk of unauthorized
usage. While MineralTree processes the bulk of the checks on behalf of the customer,
it’s recommended to keep some check stock on hand for the occasional exception
where you have to physically write a check.
D. VENDOR PAYMENT INFORMATION UPDATES - When sensitive
information regarding vendor information, like account numbers and addresses,
changes you’ll need to call the vendor and confirm accuracy as this can be an indicator
of fraud. A benefit to using an automated system like MineralTree’s invoice-to-pay is
that you are notified when a sensitive change has been made. This allows you to
confirm and update the information as soon as possible.
E. TRACK CHECK NUMBERS - As checks are being processed, keep
a log of all check numbers going out. This helps you identify if certain checks are
missing or if you missed a payment. One way MineralTree has implemented this
payment entry control is through its PositivePay feature, which provides extra security
and ensures that any check sent matches the one being deposited.
7. Give Atleast (5) internal control for Inventory and
Productions
A. INVENTORY COUNTS- Companies conduct physical inventory
counts periodically and compare the inventory counted to the inventory recorded in the
system. This allows the company to identify any discrepancies. The company can
investigate these discrepancies to determine if an error occurred or if there was a fraud.
B. DOCUMENTATION - Documentation makes up a primary
component in any company’s internal control structure. In the inventory warehouse,
these documents include using receiving documents, shipping documents and
intercompany transfer documents. These provide a paperwork trail that allows any
employee or manager to locate the inventory within the facility, whether the inventory is
in the warehouse or on the production line.
C. SECURITY CAMERA- Employee theft, outside theft and mistaken
documentation allow inventory to be missing from its assigned location. Security
cameras provide a video record of all the activity that occurs in the warehouse and on
the production line. When a discrepancy occurs between the recorded level of inventory
and the actual quantity, management can review the video footage looking for physical

4. inventory movement and comparing that movement to the recorded inventory
movement.
D. AUDITS- Periodic audits of bills of materials, negative balances in
inventory and scrap tracking will offset inventory location errors, misallocation of raw
materials, overpurchasing and overstatements of materials in inventory. For example, if
materials are taken from one warehouse, but mistakenly recorded as taken from a
second, the second warehouse may show a negative inventory balance, triggering
automatic overpurchasing, when in fact the materials are still in the second location.
E. TRACKING- The most basic step in inventory control is maintaining
a catalog of exactly what a business has and where it is. Most businesses today rely on
electronic inventories of some sort, often using bar-codes and RFID tags to keep close
track of items. All inventory locations should be numbered and inventory items identified
with those numbers. Tracking systems should be in place.
8. Give Atleast (5) internal control for Payroll and Personnel
A. LIMIT ACCESS TO PAYROLL RECORDS - One of the best ways to
manage your payroll is to limit the number and type of employees who have access to
the data. Generally, only employees working in your HR and payroll departments should
have access. Even then, depending on the size of your company, you may limit access
further to specific employees only.
B. SEPARATE PAYROLL DUTIES- When your business has fewer
than 20 employees, you probably do payroll yourself or have a single payroll employee
handling your payroll. But when your business grows and you add payroll employees,
it’s a good idea to separate payroll duties among workers.
C. CONDUCT REGULAR PAYROLL AUDITS- Regular payroll audits,
both internal and external, are crucial to ensuring your payroll controls are effective.
Internally, you or a trusted payroll manager should regularly audit your payroll records.
You need to make sure the data is accurate. Regularly reviewing these records can also
help you spot trends and discrepancies more on that later.
D. RESTRICT ACCESS TO RECORDS - Lock up employee files and
payroll records at all times when they are not in use, to prevent unauthorized access.
Use password protection if these records are stored on line. This precaution is not just
to keep someone from accessing the records of another employee, but also to prevent
unauthorized changes to records (such as a pay rate).
E. CHANGE TRACKING LOG- If you are processing payroll in-house
with a computerized payroll module, activate the change tracking log and make sure
that access to it is only available through a password-protected interface. This log will
track all changes made to the payroll system, which is very useful for tracking down
erroneous or fraudulent entries.
9. Give Atleast (5) internal control for Investing
A. Documents/securities shall be kept by the Treasury Officer at all
times in the company’s vault.
B. Income arising from interest payment of a particular security shall be
closely monitored and collected on time.
C. A report of the yield on investments shall be prepared and
submitted to the management from time to time.
D. Investment funds should only be placed to reputable banks and
investment houses.

5. E. Withdrawal of funds should be approved by the senior officer at all
times while all placements should be approved by the two senior or authorized officers
at all times.