Accounting - Internal Cash Control - Essay Example

This will help the company to shift from manual processes to automated processing. Lastly, a safe should be provided where all blank checks are stored and access should only be provided to the treasurer or whoever, is entitled to sign checks. Guard Dog Company has brought stringent changes to their system which will help them use their cash well and avoid any mistakes in cash disbursements. Guard Dog has applied the following principles in their attempt to strengthen their internal cash control for cash disbursements.

Firstly, Guard Dog’s approach to eradicate manually preparation of checks has been in pursuance of a principle known as ‘Documentation procedure’. All checks are to be numbered and written after receiving approved invoices. Multiple payments can be avoided through this process. Secondly, another principle that the company has applied is ‘establishment of Responsibility’. The principle requires designation of personnel, preferably treasurer, to write any disbursement check. The company has assigned Tom Kimball, the treasurer, or Karen Thews, the assistant treasurer, to make all check disbursements.

Fourthly, the company has applied ‘segregation of duties’ principle as well. According to this principle, different individuals approve and make payments. In this case, the invoice should be approved by Jane Bell, the purchasing agent, and Dennis Kurt, the receiving department supervisor. After the approval is given, the checks would be written by either the treasurer or his assistant. This will help them minimize the potential for theft. Fifthly, a principle that is essential to strengthen cash control is the application of ‘Physical, mechanical and Electronic Controls’.

This principle requires the company to store blank checks in safes with limited access (Harrison, 2008). The company has obeyed to this principle by storing all blank checks in a safe in the treasurer’s