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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 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 ITEMS INCLUDED IN “CASH”
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CASH
Agapito, PaulDela Cruz, PaulineLucman, FatimahTorio, Jeandie
• 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.
WHAT IS 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 ITEMS INCLUDED IN “CASH”
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)
SPECIAL CASES
AT FACE VALUE!
*Translate to reporting currency using SPOT RATE.
SPOT RATE: - the exchange rate at the time of reporting.
HOW DO YOU VALUE CASH IN YOUR B/S?
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
WHAT IS CASH EQUIVALENTS?
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)
WHAT IS INTERNAL CONTROL?
• 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
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.
5 ELEMENTS: (CRIME)
• 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
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
COMMON INTERNAL CONTROLS 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
COMMON FRAUD RELATED TO CASH:
