financial control system

7/31/2019 Financial Control System

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Financial Control System

An organized process ofregulating orsupervising IA businesstransactions throughregular and timely audit


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Purpose for AdoptingFinancial Control System

1. Safeguard the assets of the IA.

2. Check the accuracy and reliability of

each accounting/bookkeeping data.

3. Promote operational efficiency and

encourage adherence to prescribed IA

policies and systems.


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The system employed within an IA tosafeguard its assets and check the

accuracy and reliability of itsfinancial records and to promoteoperational efficiency and adherence

to managerial policies and systems.


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INTERNALCONTROL

ACCOUNTINGCONTROL

ADMINISTRATIVECONTROL


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COMPONENT OF INTERNAL CONTROL

1. Organizational structure

2. Procedures

3. Standard performance4. Internal auditing

5. Physical and mechanicalfacilities

6. Reports


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Methods and

procedures oninternal control


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APPLICABLE TO IAs

Cash Receipts

Receivables

Fixed Assets

Cash

Disbursements

Accounts Payable

Receipts & AssetsDisbursements &Payables


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Cash Receipts

1. Cash collections should be supported byOfficial Receipts (ORs) or other cash proofs.

2. Ors or other forms should be seriallynumbered and kept in safe custody.

3. Unused forms should be checked regularly andall accounted for including the original copies ofthose cancelled.

4.Cash collection should be promptly turned overto the authorized collecting officer and deposited

in a bank. 5. The collection function should be performed

by a person other than the one to deposit theamount tom the bank.


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Cash Receipts 6. Details of duplicate deposit slips stamped by the

bank should be checked against the original

bookkeeping entries and supporting entries a personnot directly responsible for making the deposit.

7. Bank accounts should be properly authorized bythe Board of Directors.

8. Miscellaneous income should be regularly checkedby a responsible officer to ascertain that correctamount were received and deposited.

9. Proper physical safeguards and facilities should beemployed to protect cash and cash transactions.

10. Cash receipts should be recorded immediatelyafter receipt to establish accountability.


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Receivables

1. Adequate records should be kept to ensure thatall collections are accounted for and to facilitatefollow up receivables not collected.

2. The keeper of receivables records should nothave anything to do with cash receipts and

disbursements to prevent any opportunity toremove cash and conceal its removal. 3. Advances to employed should be authorized in

writing by a responsible independednt officer toprevent concealment of a defalcation and to

control the giving out of such advances. 4. The failure of officers or leaders to adhere to

repayment of terms of advances should bebrought to the attention of the IA leader andmembers immediately.


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Fixed Assets

1. Additions to fixed assets should be authorizedand approved by the Board of Directors.

2. A periodic inventory of fixed assets should betaken and compared with detailed records.

3. Approval of the Board of Directors should berequired for the sale of or scrapping of fixedassets.

4. An accounting policy in depreciation should be

established and followed consistently. 5. Small tools should be safeguarded and kept in

a specific location to prevent theft or losses.


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Cash disbursement

1. Should be accompanied by vouchers and othersupporting documents.

2. Person who signs vouchers should ascertainthat the payments is in order before affixing theirsignature.

3. Vouchers should be approved for payment byan officer other than the person initiatingpayment so that fraudulent payments areprevented.

4. Vouchers and other supporting documentsshould be marked PAID after psyment.

5. All cash transactions should be recordedpromptly.


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Accounts payable

The person responsible foraccounts payable should not

have anything to do withreceipt, custody ordisbusersement of cash, with

purshasing or custody ofinventory.


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AUDITING

critical and systematicexamination of the financialreports, documents, records

procedures and controls todetermine whether they conformto the prescribed criteria ,

policies and systems andprocedures for associationsoperations.


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Internal

Auditing

ExternalAuditing


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Auditing Guidelines

Frequency of Auditing

Auditors conduct and behaviour

Timing of examination

Simultaneous cash count

Accountable officers presence duringthe count

Cash shortage and overage


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COLLECTIONS

AccountableOfficers

Activity Requirements

Treasurer

Cash Count Cash (bills & coins),checks,

Examina-tion ofRecords

Financial Books,OR, vouchers,Pass Book, Deposit/withdrawal slips


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DISBURSEMENTS

Cash Book Entry Voucher Entry

OR from payees

Honoraria

Official receipts

Attendance sheetor report

Purchases

Fees and Bills

with

with

with


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Supporting Documents to Audit Report:

Cash Production Notice

Cash Count Sheet

Statement of Accountability ofAccountable Officer

Demand Letter

Statement of Accountability forAccountable Forms without money.

Detailed Audit for Receivables

C h P d ti N ti


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Cash Production Notice________________________________________________________________________

Name of IA

____________________________________________________________

Address

CASH PRODUCTION NOTICE

Date:________________

To: ________________________

________________________

________________________

Demand is hereby made that you produce all your cash treasury warrants, checks, money orders, cash

items and paid vouchers, etc. for which you are officially accountable as __________________ of the

_______________________, and any funds, checks, treasury warrants and/or cash items in your possession

held for deposit and safekeeping.

________________________________

Auditor

Noted and complied with:

___________________________

Accountable Officer

___________________________Date

CASH COUNT SHEETA f


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As of ____________________________

Name of IA: _____________________________________________

Accountable Officer: _____________________________

Designation: ____________________________

A. CURRENCY1. Bills

No. of Pcs. Denominations Amount

P

P

2. Coins

P

B. Checks and Money Orders:Sr. No. Date Drawee Produced Allowed Disallowed

P

Total Cash, Checks, TW, MO Counted: P ___________

Certified Correct:

_______________________________ ___________________________

Examiner Accountable Officer

C E R T I F I C A T I O N

I hereby certify on my Official Oath;

) That upon demand by the examiner, I produced all my cash, treasury warrants,checks, money orders, paid vouchers and payrolls and other cash items, for whichI am officially accountable;

) That he inventory of such cash and cash items in my possession as of the time ofcash count today, P______________ was disallowed by the examiner and;

) That the said cash and cash items were returned to me intact after the cash count.__________________________________

Accountable Officer

___________________________ ___________________________

Witness Witness

CASH

COUNTSHEE

T


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S

TATEMEN

TOFACCOUNTABILITYOF

ACC

OUNTABL

EPERSON

________________________________________________(Name of IA)

______________________________________________________(Address)

STATEMENT OF ACCOUNTABILITY OF ACCOUNTABLE PERSONAs of _________________________

Cash Book Balance, __________________ P_____________

Add: Collections

Date OR. No. Amount

Total Collection . . . . . . . . . . . . . . . . . . . . P____________Total Cash Handled . . . . . . . . . . . . . . . . . . . P____________

Less: Disbursement

Date CV. No. Amount

Total Disbursement . . . . . . . . . . . . . . . . . . . P____________

Cash Book balance as of _____________________ P ____________

Prepared and Certified Correct by:

_______________________________ ____________________Auditor Date

- - - - - - - - - - - - - - - - - - - - - - - - - -

I hereby certify that my accountability as ______________________ of___________________________________ IA for cash collections as of time of counttoday, ______________________ is correctly stated above, amount totaling____________________________________________________, (P____________ )

_________________________________Accountable Officer


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NOT

ICEOF

CASH

OVERAGE/SH

ORTAG

E

NOTICE OF CASH OVERAGE/SHORTAGE

Date: __________________

_________________________

_________________________

_________________________

r/Madame:

This is to inform you that in examination of your cash and accounts as _________________ of

________________________, it was found out that your cash was over / short by

_______________________________________________

__________________}. The overage / shortage was arrived at as follows:

Collection Cash Advance Total

CCOUNTABILITY:Balance shown by your Cashbook

n ___________ certified correcty you and verified by us. _________ ___________ _________

REDITS TO ACCOUNTABILITY:

Cash and valid cash items

produced by you and counted

by us. _________ ___________ _________

VERAGE / SHORTAGE: P_________

Very truly yours,

_____________________

_____________________

_____________________

riginal Received:

_____________________________

Accountable Officer

___________________

Date
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