This document outlines internal controls for cash receipts and cash disbursements. For cash receipts, it describes controls around transaction authorization, segregation of duties between processing cash, records, and inventory, supervision of areas, accounting records maintained, limiting access to cash and records, and independent verification. Similarly for cash disbursements, it outlines controls for transaction authorization, segregation of purchasing and payments, supervision, accounting records, access controls, and independent verification including bank reconciliations. The overall purpose is to establish internal controls to safeguard cash and ensure accurate financial reporting.

1. Cash Receipts Internal Control
Transaction Activities Sales Processing Cash Receipts
Transaction Authorization • Credit Policy
• Return Policy
• Cash Prelist
Segregation of Duties • Credit is Separate
from processing
• Inventory control is
separate from
record keeping
• Accounts
Receivable is
separate from
General Ledger
• Cash Receipts
must be separated
from Encoder and
Accounts
Receivable
Supervision • Office
Accounting Records • Sales journal,
Accounts
Receivable
Subsidiary Ledger,
Accounts
Receivable
Control (GL),
Inventory
Subsidiary Ledger,
Inventory Control,
Sales Account
• Checks, Cash
Receipts Journal,
Accounts
Receivable
Subsidiary ledger,
Cash Account,
Accounts
Receivable
Control Account
Access • Limit Physical
Access to
Inventory and
Access to
Accounting
Records
• Limit Physical
Access to cash
and Access to
Accounting
Records
Independent Verification • General Ledger • Cash Receipts,
Bank
Reconciliation and
General Ledger

2. Cash Disbursements Internal Control
Transaction Activities Purchasing Disbursements
Transaction Authorization • Inventory • Cashier authorizes
payment
Segregation of Duties • Inventory custody
is separate from
inventory control
• Cash
disbursements is
separate from
General Ledger
Supervision • Receiving area
Accounting Records • Receiving Report,
Purchases Journal
and General
ledger
• Cash
Disbursements
Journal, General
Ledger Cash
Account
Access • Security over of
physical assets
and limit access to
accounting
records
• Security over of
cash and limit
access to
accounting
records
Independent Verification • General Ledger
reconciles overall
accuracy of
process
• Review cash
disbursements,
periodic bank
reconciliation of
controller and
overall
reconciliation of
General Ledger