Bank Reconciliation and Internal Control
Bank reconciliation is one thing that enables an organization understand and control cash usage in an organization (Lage, 2008). It gives an organization an opportunity to check and prevent theft of cash.
- Corrected bank reconciliation for Surf’s Shop
| Amounts in $ | |
| Adjusted Balance per books on 6/30/12 | 2093 |
| Adjustments: | |
| Deduct: Bank service charges | -25 |
| Deduct: NSF checks & fees | -1500 |
| Add: Notes receivable collected by bank | 2000 |
| Adjusted/corrected balance per books | 2568 |
- The missing amount of money was (2568-2093)=$475
- The missing money was hidden in the bank reconciliation through the recognition of the NFS check among the outstanding checks. This enabled the clerk preparing the reconciliation conceal the amount of money missing.
Cash theft is one thing which happens regularly in companies. This is because many companies have not been able to come up with internal control measures capable of avoiding cash theft (Arwinge, 2012). The management as well as other concerned officers of Surf’s Shop should be able to come up with ways of ensuring that the cash in the company is secure and put into good use. One of the things that can assist in cash prevention is the use of visual devices. These will make the employees afraid of being caught in the act. It is also important to get a supervisor to review everyday’s transactions. This should be checked against the available receipts. The receipting system should also be made more effective. Whenever the company’s cash is being issued, proper documentation and approval should be done. The documents should be signed by the relevant authorized officers. Verification of all payments should be done properly on daily basis. This should be assisted by inclusion of statements regarding theft in the contracts of the employees.
References
| Arwinge, O. (2012).Internal Control: A Study of Concept and Themes, Springer.
|
Lage, M. (2008). Accounting-Bank Reconciliation, LPF.
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