Cash Controls
Identify the Control
Match each situation with the correct control type
Daily bank deposits
➛ Bank Control
Manager approval before payment
➛ Authorization
Keeping cash in a locked safe
➛ Physical Control
Different staff receive and record cash
➛ Segregation of Duties
Cash Risk Identification
State the risk in each situation
One employee receives cash and records it.
➛ Risk of fraud or theft due to no segregation of duties.
Cash is kept overnight in an unlocked drawer.
➛ Risk of theft due to lack of physical control.
No receipts are issued for cash sales.
➛ Risk of unrecorded sales and cash misappropriation.
Payments are made without approval.
➛ Risk of unauthorized or unnecessary payments.
Control or No Control?
Indicate whether the following is a good control or poor control
Paying expenses only by cheque
➛ Good Control
Allowing staff to borrow cash from the till
➛ Poor Control
Recording cash sales at the end of the week
➛ Poor Control
Depositing all cash receipts daily
➛ Good Control
Mini Case Study
A small retail shop receives most of its sales in cash. The owner allows one employee to
➛ Receive cash
➛ Record sales
➛ Keep the cash box
No receipts are issued, and cash is deposited once a week.
Questions
Identify three weaknesses in the cash control system.
➛ One person handles receiving, recording, and keeping cash.
➛ No receipts issued for cash sales.
➛ Cash is deposited only once a week.
Suggest two controls that could improve cash safety.
➛ Issue receipts for all cash sales.
➛ Separate cash handling and record keeping.
➛ Deposit cash daily.
➛ Use a locked cash box or safe.
Any two earn full marks
Explain why segregation of duties is important in this case.
➛ It reduces the risk of fraud and errors by ensuring no single person controls all aspects of cash handling.
Quick Quiz
Why is cash considered the most risky asset?
➛ Because it is easy to steal and misuse.
What is internal control?
➛ Policies and procedures used to safeguard assets and ensure accurate records.
Name one control used for cash receipts.
➛ Issuing receipts / Daily bank deposits.
Name one control used for cash payments.
➛ Authorization / Payment by cheque.
One person should handle all cash-related tasks.
➛ False
Bank Reconciliation ➧ Here