Cash and Internal Control

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Module 10 Written Assignment - Cash and Internal Control

Nicole Amodei

Rasmussen College

Author Note

This written assignment is being submitted on March 17, 2013 for A140 Financial Accounting I Course.

| Canyon Rental |


To: Angeliki Javarinis

From: Nicole Amodei

CC: Management

Date: 3/17/13


Re: Cash and Internal Control

Pre-Numbered P.O. & Sales Invoices

It is to my understanding that the current system in place does not use pre-numbered purchase orders (P.O.’s) or sales invoices due to the added cost of said documents. It would be my recommendation to spend the extra money and order these documents pre-numbered immediately. By allowing employees to enter in the numbers there is no actually way of knowing if a member is stealing from the company, e.g. Jane Doe is in sales, Jane can easily make a sale, give the customer a copy of the sales receipt, and steal the money from that sale, and destroy the original receipt of sales. By using pre-numbered invoices Jane would not be able to do this as there would require an explanation as to what happened to the missing invoice being as how the invoices are in sequential order.

Enter sales immediately

The area of cash receipts is a common target for the employee to commit fraud. This is because of the ready and available nature of this method of payment, as well as the difficulty of matching the cash with a particular transaction. Cash receipts need to be posted promptly with a pre-numbered sales receipt. A solution would be to require at least two members to insure that the balances match as well as balance the cash register at the end of every shift, on an assigned register.

Returns Policy

Internal controls over merchandise returns is highly recommended as these transactions impact, accounts such as Cash, Inventory, Sales (through Sales Returns and Allowances), Cost of Goods Sold, Accounts Payable, Sales Taxes, etc. Both fictitious returns...