Internal Controls Relating to the Bjb Company
Various frauds are possible when this dual role is employed. In order to deliver an effective and controlled system within the internal controls environment, the use of physical custody needs to be separated from record keeping duties. Fraudulent activity will be detected if documentation and independent verification is not employed. In regards to cash receipts, there should be a designated employee such as a cashier to handle the cash. Also, proper cash recording of receiving and having custody of cash, cash register and over the counter receipts, total deposits of receipts, register receipts, as well as bank deposit slips should be performed daily (as frequent as possible). Lastly, there should be a limited authorized employee number to handle the company cash safes and cash storage in the bank (Kimmel 352).
The internal controls of the LJB Company would benefit from authorizing employees that are designated for treasury purposes only. These individuals would only deal with checks and approve payments while keeping account for the checks with an approved invoice, as well as stamping each approved invoice that has been paid. Secondly, there needs to be a safe or vault that stores the blank checks and it is restricted access to only certain authorized individuals. The machine needs to be printed with indelible ink for the correct amount. Lastly, there needs to be monthly reconciliations of bank and book balances; the company needs to have approved invoices of