1. INTERNAL CONTROL AND CASH الرقابة الداخلية على النقد
CHAPTER 8
INTERNAL CONTROL AND CASH
الرقابة الداخلية على النقد
Accounting Principles, Eighth Edition

2. Internal Control Methods and measures adopted to:
Safeguard assets. حماية الاصول
Enhance accuracy and reliability of accounting records. Reduce risk of: تعزيز الدقة ومدى الاعتماد على السجلات المحاسبية
Errors (unintentional) تقليل مخاطر الاخطاء غير المقصودة
Irregularities (intentional) او الاخطاء المقصودة
LO 1 Define internal control.

3. Internal Control The Sarbanes-Oxley Act
هذا القانون متعلق بتعزيز الرقابة الداخلية تم استحداثة عام 2005 بعد سلسلة من الفضائح المحاسبية والتي تسببت بانهيار الكثير من الشركات الامريكية الكبرى
Companies must
develop principles of control over financial reporting.
تطوير مبادئ الرقابة الداخلية على التقارير المالية
continually verify that controls are working.
التحقق باستمرار من ان نظام الرقابة يعمل بشكل جيد
Independent auditors must attest to the level of internal control. المدققون المستقلون يجب ان يصادقوا أي يفحصوا مستوى الرقابة الداخلية
SOX created the Public Company Accounting Oversight Board (PCAOB).
LO 1 Define internal control.

4. Internal Control Measures vary with
Principles of Internal Control مبادئ الرقابة الداخلية
Illustration 8-1
Measures vary with
size and nature of the business.
حجم الشركة وطبيعة عملها
management’s control philosophy.
فلسفة الادارة في الرقابة
LO 2 Identify the principles of internal control.

5. Mechanical and Electronic
Internal Control
Principles of Internal Control
Illustration 8-3
PHYSICAL, MECHANICAL, AND ELECTRONIC CONTROLS
Physical
حسي واقعي
Mechanical and Electronic
ألي والكتروني
LO 2 Identify the principles of internal control.

6. Principles of Internal Control
INDEPENDENT INTERNAL VERIFICATION
Records periodically verified by an employee who is independent.
Discrepancies reported to management.
OTHER CONTROLS
Bond employees. كفالة موظفين
Rotate employees’ duties and require vacations.تدوير الموظفين على الاعمال
Conduct background checks. اجراء التفتيش المرتجع
LO 2 Identify the principles of internal control.

7. Internal Control over Cash Receipts
Cash Controls
Internal Control over Cash Receipts
Establishment of Responsibility
Only designated personnel are authorized to handle cash receipts (cashiers)
Documentation Procedures
Use remittance advice (mail receipts), cash register tapes, and deposit slips
Independent Internal Verification
Supervisors count cash receipts daily; treasurer compares total receipts to bank deposits daily
Segregation of Duties
Different individuals receive cash, record cash receipts, and hold the cash
Physical, Mechanical, and Electronic Controls
Store cash in safes and bank vaults; limit access to storage areas; use cash registers
Other Controls
Bond personnel who handle cash; require employees to take vacations; deposit all cash in bank daily
Illustration 8-5
LO 3 Explain the applications of internal control principles to cash receipts.

8. Cash Controls
Cash consists of coins, currency, checks, money orders, and money on hand or on deposit in a bank.
النقد يتألف من العملات المعدنية والورقية والشيكات والأوامر البريدية والأموال تحت اليد او المودعة لدى البنك
Cash receipts come from:
cash sales مبيعات نقدية
collections on account from customers
المتحصلات النقدية من العملاء
receipt of interest, rent, and dividends
مقبوضات الفوائد والإيجار وأرباح الاسهم
investments by owners الاستثمارات من قبل المالكين
bank loans القروض البنكيه
proceeds from the sale of noncurrent assets
المتحصل من عملية بيع الاصول غير المتداولة
LO 3 Explain the applications of internal control principles to cash receipts.

9. Mail Receipts Control Procedures: اجراءات الرقابة
Mail receipts should be opened by two people, a list prepared, and each check endorsed.
بريد المقبوظات يجب ان يفتح من قبل موظفان, وإعداد قائمة , والشكات المصادقة
Copy of the list, along with the checks and remittance advices, sent to cashier’s department.
نسخة من القائمة, مع الشكات والتحويلات ترسل دائرة الصندوق
Cashier adds the checks to the over-the-counter receipts and prepares a daily cash summary and makes the daily bank deposit.
دائرة الصندوق, تعد ملخص النقدية اليومي
Copy of list sent to treasurer’s office for comparison with total shown on daily cash summary.
نسخة من القائمة , ترسل الى مكتب مدير الخزينة للمقارنة بالإجمالي الظاهر في ملخص النقدية اليومي
LO 3 Explain the applications of internal control principles to cash receipts.

10. Internal Control over Cash Disbursements
Cash Controls
Internal Control over Cash Disbursements
Generally, internal control over cash disbursements is more effective when companies pay by check, rather than by cash.
Applications:
Voucher system
Electronic funds transfers (EFT) system
Petty cash fund
LO 4 Explain the applications of internal control principles to cash disbursements.

11. Internal Control over Cash Disbursements
Cash Controls
Internal Control over Cash Disbursements
Establishment of Responsibility
Only designated personnel are authorized to sign checks (treasurer)
Documentation Procedures
Use prenumbered checks and account for them in sequence; each check must have an approved invoice
Independent Internal Verification
Compare checks to invoices; reconcile bank statement monthly
Physical, Mechanical, and Electronic Controls
Store blank checks in safes, with limited access; print check amounts by machine in indelible ink
Segregation of Duties
Different individuals approve and make payments; check signers do not record disbursements
Other Controls
Stamp invoices
PAID
Illustration 8-8
LO 4 Explain the applications of internal control principles to cash disbursements.

12. Internal Control over Cash Disbursements
Cash Controls
Internal Control over Cash Disbursements
Petty Cash Fund - Used to pay small amounts.
Involves: صندوق المصاريف النثرية يستخدم لدفع المقادير القليلة
establishing the fund, تأسيس الصندوق
making payments from the fund, and الدفع يتم من خلاله
replenishing the fund. اعادة تزويد الصندوق
LO 5 Describe the operation of a petty cash fund.

13. Cash Controls
E8-8 Lincolnville Company uses a petty cash system. The fund was established on March 1 with a balance of $100. During March the following petty cash receipts were found in the petty cash box.
خلال الشهر الوصولات التالية وجدت في الصندوق
March 5 Stamp inventory طوابع $39
March 7 Freight-outمصاريف نقل بضاعة للخارج 21
March 9 Miscellaneous expenseمصاريف متفرقة
March 11 Travel expense مصاريف نقل
March 14 Miscellaneous expense
The fund was replenished أعيد تزويدهon March 15 when the fund contained $3 in cash عندما كان الصندوق يحتوي على 3 دولار فقط. On March 20, the amount in the fund was increased to $150.
Instructions: Journalize the entries in March that pertain to the operation of the petty cash fund.
Question 2-19 (textbook) No, Jim is not correct . The proper sequence is as follows :
( b ) Business transaction occurs.
( c ) Information entered in the journal.
( a ) Debits and credits are posted to the ledger.
( e ) Trial balance is prepared.
( d ) Financial statements are prepared.
LO 5 Describe the operation of a petty cash fund.

14. Cash Controls
E8-8 The fund was established on March 1 with a balance of $100.
March 1
Petty cash 100
Cash 100
E8-8 The fund was replenished on March 15 when the fund contained $3 in cash.
March 15
Postage expense 39
Freight-out 21
Miscellaneous expense 11
Travel expense 24
Cash over and short 2
Cash 97
LO 5 Describe the operation of a petty cash fund.

15. Cash Controls
E8-8 On March 20, the amount in the fund was increased to $150.
March 20
Petty cash 50
Cash 50
LO 5 Describe the operation of a petty cash fund.

16. Use of a Bank Contributes to good internal control over cash.
تساهم في تعزيز الرقابة الداخلية على النقد
Minimizes the amount of currency on hand.
تقليل من حجم الاموال تحت اليد
Creates a double record of bank transactions.
خلق سجلين للنقدية واحد في الشركة والأخر في البنك
Bank reconciliation. اعداد مذكرة تسوية البنك
LO 6 Indicate the control features of a bank account.

17. Use of a Bank Bank Code Numbers Reverse Side Front Side
Illustration 8-10
Making Bank Deposits
الايداع لدى البنك
Authorized employee should make deposit.
Bank Code Numbers
Reverse Side
Front Side
LO 6 Indicate the control features of a bank account.

18. Use of a Bank Writing Checks تحرير الشيكات
Written order signed by depositor directing bank to pay a specified sum of money to a designated recipient.
Illustration 8-11
Maker
محرر الشيك
Payee
المدفوع لة
Payer
الدافع (البنك)
LO 6 Indicate the control features of a bank account.

19. Use of a Bank Bank Statements Bank service charge خصم خدمات البنك
Illustration 8-12
Bank Statements
Debit Memorandum اشعار مدين
Bank service charge
خصم خدمات البنك
NSF (not sufficient funds)
الرصيد غير كافي ( شكات مرتجعة)
Credit Memorandum اشعار دائن
Collect notes receivable.
تحصيل اوراق القبض
Interest earned. ايراد فائدة
LO 6 Indicate the control features of a bank account.

20. Use of a Bank Reconciling the Bank Account تسوية حساب البنك
Reconcile balance per books and balance per bank to their adjusted (corrected) cash balances.
تسوية الحساب في الدفاتر والحساب بالبنك للحصول على القيمة الصحيحة لرصيد النقدية
Reconciling Items:
Deposits in transit. ايداعات في الطريق لم تظهر في الكشف الوارد من البنك
وتسمى ايضا ( شيكات برسم التحصيل) وهي شيكات ارسلت الى البنك للتحصيل من
Outstanding checks. شيكات متداولة , سلمت للعملاء لكن لم تصرف من البنك
Errors. اخطاء
Bank memoranda. اشعارات البنك
LO 7 Prepare a bank reconciliation.

21. Use of a Bank Reconciliation Procedures + Deposit in Transit
Illustration 8-13
+ Deposit in Transit
- Outstanding Checks
+- Bank Errors
+ Notes collected by bank
- NSF (bounced) checks
- Check printing or other service charges
+- Book Errors
CORRECT BALANCE
CORRECT BALANCE
LO 7 Prepare a bank reconciliation.

22. Use of a Bank
E8-11 The following information pertains to Family Video Company.
Cash balance per bank, July 31, $7,263.
Cash balance per books, July 31, $7,284.
July bank service charge not recorded by the depositor $28.
Deposits in transit, July 31, $1,500.
Bank collected $900 note for Family in July, plus interest $36, less fee $20.The collection has not been recorded by Family, and no interest has been accrued.
Outstanding checks, July 31, $591.
Instructions
Prepare a bank reconciliation at July 31.
Journalize the adjusting entries at July 31 on the books of Family Video Company.
LO 7 Prepare a bank reconciliation.

23. Use of a Bank E8-11 a) Prepare a bank reconciliation at July 31.
Cash balance per bank statement $7,263
Add: Deposit in transit 1,500
Less: Outstanding checks (591)
Adjusted cash balance per bank $8,172
Cash balance per books $7,284
Add: Collection of notes receivable 900
Collection of interest 36
Less: Bank service charge (28)
Note collection fee (20)
Adjusted cash balance per books $8,172
LO 7 Prepare a bank reconciliation.

24. Use of a Bank
E8-11 b) Journalize the adjusting entries at July 31 on the books of Family Video Company.
Dr.
Cr.
July 31
Miscellaneous expense 28
Cash
July 31
Cash
Miscellaneous expense
Interest revenue 36
Notes receivable
Note: Adjusting journal entry includes only the adjustments to the cash balance per books.
قيود التسوية فقط متعلقة بتسوية حساب النقدية في دفاتر المشروع
LO 7 Prepare a bank reconciliation.