Internal Cash Control Survey of Accounting

Idaho Company scenario has a few flaws in their process over internal control over cash disbursement. The first flaw I noticed was the fact that the checks are not pre-numbered and two employees can have access to the un-numbered, un-issued checks kept in an unlocked cabinet. The second concern is the purchasing agent pays all bills pertaining to goods that are purchase for resale; he is the sole person responsible for determining the goods that have been received along with the verification that the money is correct. Lastly, the treasurer pays all bills that are approved by authorized employees. Once that step is completed the treasurer stamps “paid” and files them by payment day, and records the checks in the cash journal.

I recommend Idaho Company to address the weaknesses that are apparent with their internal control over cash disbursements. The company should invest in pre-numbered checks; with pre-numbered checks it would be very easy to locate the numbered checks, if the un-numbered checks continue it would be very hard to keep track of the missing checks. Next, Idaho Company should install an industrial locked file cabinet. This will ensure the pre-numbered checks are kept in a well secured cabinet, with one authorized user. It would be in the best interest of Idaho company to implement two signatures with each and every check, the purchasing agent and the treasurer will verify the accuracy of the vendor bills prior to payment, and a third party will verify the two deposits before they are recorded and deposited. Lastly, I recommend after all is verified by all parties involved, recording the invoices should be stamped as paid, date and the check number that was issued, name of the vendor , and the authorizing names should be on the internal control cash records.

Guard Dog Company articulates the five basic principals for cash management. They proved by enforcing all checks to be pre-numbered and written by the company’s newly purchased check writer....