Internal Cash Control

Running head: INTERNAL CASH CONTROL
INTERNAL CASH CONTROL
Name of the Student:
Name of the University:
Author Note:

INTERNAL CASH CONTROL
1
Table of Contents
Introduction:....................................................................................................................................2
Body:................................................................................................................................................2
Data flow diagram of purchases and cash disbursements systems:.................................................2
Part 1: Data flow to process payments of credits to suppliers:....................................................2
Part 2: Data flow diagram during payment of salaries to employees:.........................................3
Data flow diagram of payroll system:.............................................................................................7
System flowchart of purchases system:.......................................................................................8
System flowchart of cash disbursements system:............................................................................9
Supplier payments:......................................................................................................................9
System flowchart of payroll system:.............................................................................................10
Description of internal control weakness in each system and risks associated with the identified
weakness:.......................................................................................................................................12
Conclusion:....................................................................................................................................12

INTERNAL CASH CONTROL
2
Introduction:
Financial resources are the key resources of business organizations which are keys to
obtaining all other resources right from procurement of materials from suppliers to payment of
salaries to employees. It is due to pivotal role which financial capital plays in business operations
that in general the top management exercises strong control over cash management. Weaknesses
in cash management attract risks which can impact crucial areas like supply chain management.
The aim of the report would be analyzing the present cash management procedures which a
selected business firm takes (Afrifa 2016). The two areas selected for viewing the importance of
cash management namely, cash management pertaining to procurement of suppliers of raw
materials and in payment of salaries to employees. The paper would be based on a case study
which considers Bell Studio as the crux of the study.
Body:
Data flow diagram of purchases and cash disbursements systems:
The diagram showing purchase of supplies of inventories and processing of payments
which Bell Studio practiced could be divided into two main parts.
Part 1: Data flow to process payments of credits to suppliers:
The data flow to process payment of credits to suppliers was initiated by the purchase
department clerk. The purchase department clerk checked the inventory under possession of the
firm and identified the stocks of goods where were short compared to the business requirement
for the day. The purchase department placed orders of procuring goods with the suppliers by
generating a purchase orders (Jarrett, Pan and Du 2018). The data in this case consisted of

INTERNAL CASH CONTROL
3
information about the stock of goods which the firm required for the day. The suppliers
dispatched the goods according to the data mentioned in the purchase order or PO. The goods
were received by the receiving department clerk who in turn generated receiving report
consisting of the data pertaining to the particulars mentioned in the POs. The receiving
department forwarded the inventories to the warehouse department for storage with one copy of
receiving report or RR while it retained the second copy with itself. The warehouse department
after receiving the goods forwarded the PO and the RR to the accounts payable department. The
accounts payable department held the POs and RRs received till the suppliers dispatched
invoices containing the data about the inventory consigned as per the purchase order (Ang 2017).
The credit payment department then tallied the data of consignment received as mentioned in the
three document namely, the POs, the RRs and the invoices received from the supplier firms. The
accounts payable after tallying the data from the aforementioned documents, advanced towards
making payment to the suppliers in the payment mode prescribed by the company namely,
cheque payment. The accounts payable maintained the cheque(s) in its possession till the due
date following which the documents along with the cheques were forwarded to the treasurer for
approval. The treasurer after verifying the authenticity of the data approved the payment and
dispatched the cheques to the creditors or suppliers (Afrifa and Tingbani 2018). The treasurer
maintained a copy of all the documents containing the data namely the POs, the RRs, the
invoices and the cheques dispatched. A copy of all the documents were dispatched to the
receiving department for maintenance in the data base of the firm namely, Bell Studios.
Part 2: Data flow diagram during payment of salaries to employees:
The flow of data which ultimately led to the payment of salaries to employees was
initiated by the employees of the company namely, Bell Studios. The employees recorded their