Cash Payments Controls - BC Bookkeeping Tutorials|

Go to content

Cash Payments Controls

Cash Controls
  • Establish procedures for recording, preparing, reviewing, and signing and mailing checks.

  • Set up and notify bank of authorized check signers. Set up limits-some checks might require two signatures. Check signers should not be individuals that record or prepare the checks.

  • Only prepare checks for expenditures that have been properly approved and have supporting documents such as invoices, purchase orders, receiving reports, expense reports, etc.

  • All checks should be pre numbered and accounted for.

  • Checks, Check Book, and Signature Stamp should be locked up.
Let's not provide a temptation by having our checks or checkbook easily accessible. Unfortunately it has happened where blank checks have been taken from the end of a checkbook or stack of computer checks and forged. If a proper bank reconciliation and review of the cashed checks is not performed this theft could go unnoticed.

  • A three part check is recommended in order to have the original check and two additional copies for the following accounting records.
    • Original - sent to supplier and included and returned by the bank with the Bank Statement.
    • Copy to attach to the supporting documentation (invoice, purchase order, receiving reports, etc. and filed in the supplier's file.
    • Copy to maintain in a numerical check file.

  • Duties:
    • Individuals responsible for recording the checks should not prepare, and/or sign, and/or mail checks, and/or prepare the bank reconciliation.
    • Individuals responsible for preparing the checks should not record, and/or sign, and/or mail checks, and/or prepare the bank reconciliation.
    • Individuals who sign checks should not prepare and/or record, and/or prepare bank reconciliations.

  • Void checks should be filed and accounted for.

  • Supporting documents along with the prepared check should be provided to the check signer. Prior to signing the check, the approved check signer(s) should review the attached documentation to ensure that all the necessary approvals have been obtained and that the attached documentation supports the amount of the check and who the check is made out to (payee). The invoice along with any other supporting documentation should be Marked As Paid (Canceled) so that it can not be used again as support for another check.

  • Refrain from using monthly Supplier Statements as documentation for checks.

  • Signed checks should be mailed immediately by an individual not involved with recording or preparing the check.

  • Checks should not be prepared if they are not going to be mailed immediately.

  • A Copy Of the check along with the attached documentation should be promptly filed in the Vendor's File.

In this lesson we learned that Internal Controls as they apply to Cash are just the policies, activities, and safeguards that are in place to provide assurance that Cash is properly being protected, managed and controlled.

We discussed General Cash Controls as well as some specific controls and procedures related to Cash Receipts and Cash Payments (Disbursements).

I know you don't want to have to be a cop, but unfortunately if you don't watch your business and Cash who's going to ?

What's next ?

Banking Terms

Back to content