Internal Control for cash receipts transaction

1. Computer is used in recording the cash receipts from the customer.

2. Cash collection is deposited every other day to the bank.
3. Accounting personnel is prohibited from handling cash.
4. There is an internal verification of the agreement of daily cash

summaries and cash receipts journal.

5. Cash are stored in cash box prior to deposit.
6. Periodic independent count is made on cash on hand.

Internal control for cash and bank accounts

1. Bookkeeper should review checks, check register totals and bank

statements regularly.
2. Bookkeeper will reconcile bank accounts regularly.
Internal control for Purchase
1. There is a separation of duties between authorization, recording and

custody of supplies purchased.

2. Immediate control established over supplies received from suppliers.
3. Ensure payments are on original invoices only.
4. Receiving report are made after an independent count.
5. After payments are made, stamps are perforate in original invoices

and matched with the vouchers.

6. Purchase orders, receiving reports and vendors invoices are matched

with vouchers.
7. All issued vouchers are accounted for in journals.
8. Voucher register is reviewed.
9. Supplies are stored in a locked area with restricted access.
10. There is a periodic independent comparison of supplies records

with supplies on hand.

Internal control for payroll cycle
1. Wage rate is determined by the contract or approved by a personnel

officer.
2. Time clock is used.
3. There is internal verification of payroll check with the payroll register

data.
4. Payroll check is signed by the owner.
 5. There is a segregation of duties between journalizing of the payroll

transaction and in preparing and paying the payroll.

6. Unpaid wages are being controlled by the owner.
7. Bank payroll check is being safeguarded.
8. Personnel and employee earnings records are kept in locked files as

well as in the electronic files that are safeguarded with the

passwords.

Transaction Cycles
Cash receipts cycle
1. The customer will pay to the cashier after the service had

been rendered.
2. The cashier will enter to the computer the amount due. Two

copies of official receipts will be made.

3. One copy of the receipts is kept by the business and other is

given to the customer.

4. Cash collection from the customer will be deposited next day

after the operation at 9 am by the owner.

5. The bookkeeper will account for the sequence of particular

forms and will record it as service revenue.

Purchasing Cycle
1. When materials are in its repurchase level, the cashier will

prepare a purchase requisition slip that lists all needed

materials.

2. The purchase requisition will be forwarded to the owner for

review and approval. One of the staff will shops for the

supplies from the approved list of suppliers.

 3. The owner will then prepare three copies of purchase order.

One copy will be sent to the cashier as a record and to

authorize the cashier to receive the supplies, one copy will be

sent to the supplier, and the last copy is for the bookkeeper.

4. When the supplier delivered the materials, the cashier will

inspect the goods and prepare three copies of receiving

report. One copy for the bookkeeper and another for the

owner, the last copy should be kept in the records.

5. The bookkeeper will match and merge the receiving report

and the purchase order to make sure that all needed

materials are delivered.

6. The invoice, purchase order and receiving report relating to a

transaction are kept together and filed by due date. The pre-

coded documents will be arranged alphabetically.

Cash Disbursement Cycle

1. The bookkeeper determines which vouchers are due for

payment. He must inform the cashier a day before the due

date
2. He then forwards the copies of the voucher, the invoice from

the vendor, the purchase order and the receiving report to the

cashier.
3. The Cashier will confirm the data transcribed therein. He will

prepare disbursement vouchers in three copies which will be

 sent to the vendor, to the bookkeeper and the last copy shall

be filed numerically.
4. The Cashier will prepare a Cash Summary. Cash summary is

forwarded to the Bookkeeper together with the copy of

Disbursement Vouchers, the Vouchers which must be stamped

paid, the Invoice, the Purchase Order and the Receiving

Report.
5. Bookkeeper record the transaction in the cash disbursement journal upon

receipt of the paid voucher accompanied by complete supporting

documents which will be merged and filed according to date. The other

copy of the voucher shall be filed numerically, while the cash summary

shall be filed based on the date.

Petty Cash Disbursement
1. The Bookkeeper will prepare a petty cash voucher upon

approval of the owner and will give it to the payee. The payee

must sign to the voucher to acknowledge payment after

encashment of the petty cash voucher from the cashier.

2. The petty cash voucher will remain to the bookkeeper for the

replenishment. Procedures in the cash disbursement are to be

followed for the petty cash replenishment with the petty cash

voucher as supporting documents.

Payroll Cycle
1. The owner shall approve the time cards of employees. He shall

review signed timecards and prepare a Summary of Total Hours.

After that, they shall forward the timecards to the Bookkeeper.

2. The Bookkeeper verifies the timecards with the listing of

employees and pay rates.

 3. He shall then prepare the payroll, listing of payroll checks

indicating the amount to be paid, and the payroll summary in

three copies. One copy of payroll summary together with the

listing of checks shall be forwarded to the Cashier. The other

copies shall be forwarded the Owner or filing on their records

according to date. The Bookkeeper shall also maintain an

Employee Earnings Record.

4. The Cashier shall distribute payments to the corresponding

employee. Every employee will sign the payroll summary as they

receive their pay. After that, the Cashier shall forward the payroll

summary to the Bookkeeper.

5. The Bookkeeper will record the payroll and update the

accounting records. Then, he shall file the payroll summary

according to data.

Flowchart

Cash receipts cycle

 CashierBookkeeperOwner

Collections from customer

Records and compiles official receipts
Received cash collections

2 Deposit Slip
Official Receipt

Bank
Customer

Purchasing Cycle
 From Owner

Receiving Report1. Purchase Order

Sales invoice from supplier

Agreed Document and Prepare voucher

1
2. Cash Voucher

Purchase Order

2. Receiving Report

Sales invoice from supplier

Post to accounts payable ledger

By due date
File
Cash Disbursement
Bookkeeper
Voucher due date
File
Pull vouchers for paym
Cash Voucher
2. Cash Vouc
Purchase
2. Re
Cycle
Owner Cashier
Disbursement Check Check
Cash Voucher Cash Voucher
Purchase Order Cash Voucher
Receiving Report Purchase Order
Receiving Report
Sales Invoice
Sales Invoice
Approve, countersign check
nt
Stamp paid on voucher 2 and indicate payment date
er
order To Bookkeeper
eiving Report
Sales Invoice