Internal Check over Cash Payments

1. Use of Cheque:

Cheque should be used for all the payments except the petty cash. It is the first evaluate for internal control in cash payments.

2. Use of crossed cheque:

Before dispatching the cheque it should be crossed so that any other person may not cash the amount.

3. Safety of check book:

Blank check books should be under the safe custody of the responsible officials. So that these may not be misused for payments by any fraud.

4. Entry in cash books:

Payments should be recorded in the cash book as the payment is made.

5. Authorized signature:

Those persons should sign on the cheques that are authorized to sign.

6. Verification before signature:

Before signing on the cheque one should verify the documentary evidence for the payments like, voucher, invoice or ball.

7. Special nature payments:

Director of the company may sanction the payments of special nature. Cashier has no Special nature payments authority to do so.

8. Voucher importance may not be ignored:

For every payments voucher should be obtained voucher should be numbered and field their number should be noted in the cash book against the payment entry.

9. Reconciliation:

A responsible officer should settle the cash book with the bank statement time to time.

10. Wagers sheet preparation:

While maintaining the wages sheet internal control should be applied to prevent fraud.

Internal check or Control system over cash receipts.

In business there is a great risk of cash misappropriation so there is a need of safety measures. There are following system may be adapted to control over cash receipts.

1. Writing of ledger:

       The cashier doesn't write the ledger it should be written by other person cashier should not have  control over the ledger.

2. Presence of Officer:

      All the new letters should be opened under the supervision of a responsible officer.

3. Cheque's should be crossed:

      All the cheques and drafts in the mail must be crossed and noted in the daily and then delivered to the casher.

4. Comparison:

      The cash book must be compared with the dairy cash book and pass book entries should be reconciled.

5. Issue of receipts:

     A printed sequential numbered receipt should be issued for the amount record.

6. Counterfoil:

      Receipt of money should be in double or its counterfoil must be prepared and kept for reference, unused receipt books must be kept safety.

7. Daily Deposit:

      All the receipt of cash and check must be deposited on the same day or next morning.

8. Use of Cheque::

      Sometime payment received cash may not be used always cheque should be used for payment.

9. Sound system to cash sale:

      There should be a sound system of cash sales recording method of cash sales should be cash well organized.

10. Collection of cash by agent:

      Three copies of cash receipts should be prepared by the agent. One should be given to party, second should be sent to office and third should be kept by the agent agents should also be paid by the cheque.

Cash Receipt Sample

Difference between accounting and auditing?

Accounting & Auditing can be differentiated on the basis of the following points. 

Scope:

·    Accounting is related with preparing financial statements.

·    Auditing is concerned with checking financial statements.

Data:

·    Accounting is related with current data.

·    Auditing is concerned with past data.

Purpose:

·    The purpose of accounting is to show performance and financial position of a business.

·    The purpose of auditing is to certify true and fair view of financial statements.

Nature:

·    Accounting is constructive in nature.

·    Auditing is analytical in nature.

Time:

·    The time period of accounting is usually twelve months (one year). It takes twelve months (one year) to complete records.

·    The time period of auditing is less than one year. It may be completed within one month or may be more than one month.

Start:

·    When the work of bookkeeper ends then the accountant work starts.

·    When the work of accountants ends Then the  auditor work starts.

Principle:

·    The accounting principles include accrual, going concern, prudence and consistency.

·    The auditing principle include independence, objectivity, full disclosure and materially.

Methods:

·    Accounting process includes amortization, depreciation and valuation.

·    The auditing methods include manual and computerized.

Techniques:

·    Accounting methods include interest rate, depreciation rate, and installment payable.

·    Auditing process include vouching, valuation and verification.

Rules:

·    Accounting is not regulated by any code of conduct laid down by any institute.

·    Auditing is governed by code of conduct prepared by institute of chartered accountants.

Necessity:

·    Accounting is necessity of every entity having any size.

·    Auditing is not the necessity of every business.

Cycle:

·    Accounting cycle starts with journalizing and ends with final accounts.

·    Auditing cycle starts with understanding clients system and ends with an    opinion.

History:

·    History or Background of business and accounting go side by side.

·    History or Background of auditing is short as compared to accounting.

Report:

·    Accounting work involves no report to any party.

·    Auditing work requires separate report to owners.