Internal control

Internal controls over inventory /stock

• Having an alert employee at the point of sale

•  Using sensitized tags on merchandise that'll alert a salesclerk if not removed.

•  Having & using surveillance cameras

• Scrutinize employees.

•  Limit access to storage rooms and use physical controls to secure inventory.

why are there internal control over inventory?

• Loss from theft & misuse doesn't occur

•  All costs are recorded.

Internal control over cash

Cash can be easily converted into other types of assets and easily transferred from one hand to another since there's no mark of ownership.

Ways to safeguard cash: cash disbursements and receipts

Internal control using cash receipts

•  Only designated persons should be authorised to handle or have access to cash receipts.

• There should be different persons assigned to the duties of receiving cash, recording cash receipts transaction and having custody of the cash

• There should be documents to give evidence of the receipt of cash. This includes cash receipts, cash register tapes & deposit slips.

• Cash should be stored in fire-proof safes and vaults with limited access.

• Daily cash counts of receipts should be done by supervisors and comparisons must be made between the cash received, receipts written and cash deposited.

Internal control using cash disbursement

•  Only designated persons should be authorised to sign cheques.

•  Persons from different departments should be assigned the duties of approving an item for payment and making the payment.

•  Prenumbered cheques should be used and used in sequence, and all cheques should be accounted far.

•  Before cheques are signed, supporting documentation, like an approved invoice, should be presented to the check signer.

•  Blank cheques should be stored in a safe place, with limited access to unauthorised persons:

• Where cheques are printed on the computer or with a cheque - writer machine, the amount on the cheque should be in indelible ink.

• Each cheque should be compared with the approved invoice.

• Bank & book balances should be reconciled monthly

• After payment, the approved invoice should be stamped ‘PAID’

Internal controls in a computerized system

• Identify data having higher or lower values than the predetermined values

• Valid computations would also be done, also known as math checks

• Detects an improper processing order.

two important considerations in computerized accounting

• security issues

•  disaster recovery