Cash Receipts (Revenue and Receipts)

Transaction types and functions

-intiate: Receive money

-execute, records: Deposit receipts

-process: Recording

Risks When we receive money ( initiate )

1. Theft of receipts - validity

2. Receive the incorrect amount - accuracy

Risks When we deposit the receipts ( execute and record )

All cash receipts are not banked - Completeness

Risks Recording ( process )

1. Recorded receipts never actually occurred - validity

2. Amount was recorded incorrectly - accuracy

3. Amounts recorded in the incorrect period - validity

4. All receipts are not recorded - completeness

Controls

1. RECEIVE MONEY

2. DEPOSIT RECEIPTS

RECEIVE MONEY

-Cash receip: To ensure good internal control , the mail must be opened by two people and there should be a mail register .

-Copies: Once payment is received a pre - numbered cash receipt in two - fold is issued .

-Details include : Details of the payee , the date and amount .

-One copy goes to the customer as proof of payment .

-One copy goes to the business ' own records of the accounting department for recording the money received

-The cash receipts must be kept safe and the accuracy is checked and authorised by the manager and signed .

DEPOSIT RECEIPTS Segregation of duties

-Deposit cash daily

-Cash receipts journal posted to GL and debtor's ledger by a different person .

-Bank reconciliation

Deposit slip

-This is a bank document filled in by the business to record a deposit of payments received from customers .

-Details include: Date of deposit, Details of the cheque, Amount of the cash and cheque, Total amount received

Deposit receipts

-One copy goes to the bank for depositing of money received .

-One copy remains in the own records of the accounting department so that the business can record money deposited . The accuracy should be checked and authorised by management and signed ( SOD ) .

-The depositing of cash should be done daily ( SOD ) .

-The deposit slip is then used to complete the cash receipts journal which is posted to the GL and the DL ( SOD ) . Monthly reconciliations must be conducted by the accountant .

-Bank reconciliation ( between the cash book and the bank statement )

-Debtor's reconciliation ( debtors control vs. debtor's ledger balance )

-All these documents must be signed as evidence that they have occurred . The recording and reconciliations of deposit slips must be done by separate people