What Should Be Internal Control Over Cash Payment?

There are lots of chances of misappropriation of cash if there is no well organized system of internal control in operation.  There are different suggestions of internal check as regards cash payments.  Payments by cheque, issue of crossed cheques, unused cheques book, proper authorization, recording in cash book, proper agreement of vouchers etc are the suggestion for internal check. All payments as far as possible, except for petty cash should be made by cheques. Cheques should be crossed before they are dispatched. Unused cheque books should be kept under look and key by a responsible official lest they may be used by forging the signature of the officers.

Before a cheque is issued, it should be presented along with the account of the payee to a responsible officer for his signature. Cashier should not sanction the payments of special nature. Directors should do so. Internal control should be exercised over the preparation of the wages sheets to prevent fraud and manipulation. As soon as payment is made, it should be recorded in the cash book. All payments vouchers should be filed and arranged in order of their occurrences so as to facilitate the subsequent checking by the auditors.

Paid by check.