Internal Controls Over Cash
Safeguarding the Most Vulnerable Asset
Because cash is highly susceptible to theft and fraud, organizations implement strong internal controls to safeguard it. Effective controls reduce errors, improve accuracy, and help prevent misappropriation.
- Segregation of duties.
- Bank reconciliations.
- Physical security over cash.
- Authorization procedures.
- Independent reviews.
- Prenumbered documents.
Tip
Bank reconciliations are one of the most important internal controls tested on the CPA FAR exam.
Summary
Strong internal controls protect cash while improving the reliability of financial reporting.