Reporting and Operations

Cash

Size of Organization: 
Medium

Cash is an area with a high risk of error and fraud. Since there are so many possible controls in this high risk area, each control selected should be evaluated based on cost versus value to detect and eliminate error and fraud.

  • Bank statements and other correspondence from the bank are reviewed by an individual separated from the processing of activity reported on the bank statements.
  • Bank accounts are reconciled each month.
  • Review banking arrangements annually with the board officer or committee responsible for financial oversight of the organization.

Cash Receipts

  • Deposits are made daily.
    Checks received by the organization (rather than a 3rd party like a lockbox) are: immediately endorsed “for deposit only account number XXXXXX”; logged in; and sent with a copy of the check log for processing.
  • All check logs are verified to bank records (online if available).
  • Use a lockbox when economically possible.

Cash Disbursements

  • Check stock is secured and controlled by individuals separated from the production of checks.  Part of the control is verifying that the check register includes the check numbers for the stock released for printing.
  • Cash disbursements are approved by operational staff.
  • Control the signing of checks (whether manual, signature plates, or electronic).  Manual signatures are made only after the signer reviews the supporting documentation for each check.  Signature plates are secured when not in use.  Electronic signatures may only be accessed by authorized individuals.
  • Update signature cards to remove check signers as soon as they leave the organization.
  • Mutilate voided checks.
  • Review and take appropriate actions on outstanding checks monthly.
  • Electronic payments require similar controls to payments made by checks.
  • Update electronic payment authorizations to change the amounts or limit of the authorization and remove any unneeded authorizations as soon as appropriate.

Petty Cash

  • Minimize the amounts impressed and the maximum reimbursed to any individual per day.
  • Conduct unannounced internal audits of the petty cash.
  • Vouchers are numbered, completed in ink, and are supported with receipts.
  • Loans to employees should not be allowed.
  • If an advance is made, the receipt and the remaining cash should be returned to the custodian within 24 hours.