CASH
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CASH. Agapito , Paul Dela Cruz, Pauline Lucman , Fatimah Torio , Jeandie. WHAT IS CASH?. Available for immediate use/ general use Involves bills, currency, notes, coins, checks (unless bounce) postal money orders. Can be on hand or in bank

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CASH

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Cash

CASH

Agapito, Paul

Dela Cruz, Pauline

Lucman, Fatimah

Torio, Jeandie


Cash

WHAT IS CASH?

  • Available for immediate use/ general use

  • Involves bills, currency, notes, coins, checks (unless bounce) postal money orders.

  • Can be on hand or in bank

  • An asset most susceptible to improper diversion and use.

  • A medium of exchange

  • A store of value

  • A unit of account

  • NOT A LEGAL TENDER

    -particular item or medium of payment

    that can be used extinguish a debt, or

    meet a financial obligation.


Cash

CASH ITEMS INCLUDED IN “CASH”

a.) CASH ON HAND – customer’s checks

- cashier’s or manager’s checks

- traveler’s checks

- bank drafts

- money orders

b.) CASH IN BANK – demand deposits

- checking account and saving deposits

unrestricted as to withdrawal.

c.) CASH FUND - petty cash fund

- payroll fund

- dividend fund


Cash

SPECIAL CASES

  • BOUNCING CHECKS - check that cannot be processed because of insufficient funds.

  • POSTDATED CHECKS – any checks dated in the FUTURE.

  • STALE CHECKS – checks not encashed within a long period of time. (more than 6 months ago)


Cash

HOW DO YOU VALUE CASH IN YOUR B/S?

  • AT FACE VALUE!

    *Translate to reporting currency using SPOT RATE.

    SPOT RATE:

    - the exchange rate at the time of reporting.


Cash equivalents

CASH EQUIVALENTS


Cash

WHAT IS CASH EQUIVALENTS?

  • Short-term

  • can be easily encashed

  • are subject to insignificant risk of change in value

  • purchased 3 months before MATURITY

  • a debt instrument


Internal control

INTERNAL CONTROL


Cash

WHAT IS INTERNAL CONTROL?

  • Under AUDITING

  • Process and procedures to achieve the objectives/goals of an organization

  • SAFEGUARD ASSETS - from theft or any unauthorized use.

  • COMPLIANCE WITH REGULATION/LAW – taxes

  • ACCURATE INFORMATION – reasonable, for reducing the risk of errors.

  • *Sarbanes-Oxley Act of 2002 (SOX)


Cash

5 ELEMENTS: (CRIME)

  • CONTROL ENVIRONMENT

    - attitude of management and employees

    - tone at the top

    - dictates the risk

  • RISK ASSESSMENT

    - identifying and assessing the risk and their impact in the organization

    - COMMON RISK: CREDIT/COLLECTABILITY RISK

  • CONTROL PROCEDURES/ACTIVITIES

    - how you manage your risks

    - the mechanisms/ practices or procedures to address the risks that you have identified


Cash

5 ELEMENTS: (CRIME)

  • INFORMATION AND COMMUNICATION

    - how information flows in the company in order to function effectively.

    - how to disseminate information

  • MONITORING

    - “are we on the right track?”

    - you monitor what is happening in an organization for corrections.


Cash

COMMON INTERNAL CONTROLS RELATED TO CASH:

  • SEGREGATION OF DUTIES

    - separating accounting & cash custodianship

    - prone to theft

  • VOUCHER SYSTEM

    - disbursement function

    - prevent control

    *voucher – proof, supported by documents

  • ELECTRONIC FUND TRANSFER

    - connected to payments and withdrawal

    - fund transfer from on account to another


Cash

COMMON INTERNAL CONTROLS RELATED TO CASH:

  • OFFICIAL RECEIPT

    - is issued when an entity is receiving cash

  • BANK RECONCILIATION

    - detect control

    - a process of reconciling your cash balance per book and cash balance per bank


Cash

COMMON FRAUD RELATED TO CASH:

  • KITTING

    - check is drawn against a first bank and depositing the same check in a second bank

    - covering cash shortage in the latter bank

    - usually done at the end of the month

  • LAPPING

    - stealing & patching collections from customers

  • WINDOW DRESSING

    - applies to the entirely F/S

    - any deliberate misstatement

    - untruth or falsity statements


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