Every organisation should have a good control system so that to assist in the management of its accounts. This is a proposal that will look into the appropriate control of accounts in regard to outflows, that is, cash disbursements and pay rolls, to control the outflows of cash from the company. The proposal suggests some measures that if implemented will help in the control of the cash outflow from the company.
The cash disbursement is connected to purchases in the firm and included in the expenditure cycle. The objective of cash disbursement is to convert cash into tangible stock, materials, and the human resource needed (Hall, 2008, p.243). Cash disbursements is viewed as the payment of the liabilities created in the purchase system. This will be done in a manner to ensure that only those creditors who are valid will receive timely and correct amounts of payments.
It is proposed that the liabilities owed to the creditors will be cleared in time, as stipulated in the terms of payments, to have benefit from discounts, thus increasing its profit margin, and to safeguard its credit worthiness for future dealings. It is proposed that the firm will be identifying those liabilities which are due so that the cash disbursements can begin, in the accounting department. It is proposed that this will be done on a daily basis to avoid delays in the process of disbursing cash. This will be followed by preparations for cash disbursement, where the clerks will be clarifying the validity for accuracy of liabilities. Checks/payment vouchers will be prepared, copies made, and their numbers recorded together with their face value amount. For accountability reasons, it is proposed that the concerned managers will be signing the checks physically, to create a culture of responsibility in the disbursement process. Recording will be done in the cash disbursement journal together with the related documentation, that is, vouchers, and update of all the relevant journals thereof. It is proposed that the checks or the money will be wired electronically rather than the usual mailing to the relevant suppliers, who are our creditors to avoid delays and possible fraud from the personnel.
These are concerned with the payment of employees. Instituting a strong control system will be vital to check and record on employees recruitment, pay rates, working hours, leaves and overtimes, verification of the accounts for accuracy, and benefits (Collier and Samuel, 2006, p.205-6)
It is proposed that there will be a proper recruitment process of employees as stipulated by the personnel department, and new employees will be recommended and authorized accordingly by the managers concerned, as per their qualifications. It is also proposed that the rates of payment be on a pro rata basis. Time worked is properly recorded to assist in the compilation of payments. It is, therefore proposed that use of electronic cards will be introduced so that recording of time will be done electronically. This will ensure that no one will be able to cheat as every employee will have his/her own card and the use of a finger print(s) will be used to record time in and out. It is also proposed that authorization of leaves and overtimes will be handled by the departmental managers so that the amounts accrued to ones account, or to be deducted will be properly managed. Regular evaluations will be carried out so that those who have terminated their jobs will be removed from the payroll; this will be to ensure that no ghost employees exist. It is also proposed that before payments are made the accounts will be cross-checked to eliminate irregularity, and necessary corrections will made to eliminate disbursing excess cash leading to losses. Accordingly, monetary benefits that accrue to employees will be properly authorized to avoid fraud, this will be necessary so that there will be no instances where employees may be awarded benefits which they have not earned, through favoritism.
Collier, P. M., &Samuel, A. (2006). CIMA Learning System: Mnagement Accounting Risk and Control Strategy. Oxford: Elservier.
Hall, J. A. (2008). Accounting: Information Systems. Mason: South-Western Cengage Learning.