Internal Controls for Remote Locations

If your organization utilizes remote locations collecting cash receipts, such as community centers or branches, you probably already know that this is an easy area for things to go wrong. You have likely considered designing and implementing, or have already implemented controls over your cash receipt procedures. These controls can include things such as developing written policies and procedures, implementing adequate separation of duties, ensuring timely deposits, and establishing reconciliation procedures that include accountability and management review. 

One of the most important controls you can implement is separating the duties of collecting, recording, depositing, and reconciling cash receipts. This simple step can have a strong effect on preventing mishandling and safeguarding against losses. Unfortunately, many organizations do not have enough personnel to effectively separate these duties and, depending on the average value of these collections, it may not be cost-effective to hire someone new. This is why having other strong controls in place can really help safeguard your cash receipts.

The following are a few suggested controls that you can tailor to your particular organization to help mitigate the risk of loss:

• Establishing written collection policies and procedures to clearly outline duties and responsibilities to employees involved in the process.
• Restrictively endorsing all checks immediately upon receipt.  For example, you can imprint the checks with a stamp that says “For deposit only” as they are collected.
• Depositing cash receipts in the bank every day or as often as necessary for the circumstances of your particular organization and always depositing them fully intact to ensure that the total receipts is equal to the total bank deposits.
• Documenting and recording all cash receipts promptly.
• Utilizing strong physical controls, such as keeping the cash receipts in a safe or at minimum securely locked until deposited.

Remember, none of these suggestions are meant to be taken as-is: any one that you want to pursue needs to be tailored to your particular organization and situation and no one control will cover all of your risk areas.

However, as a general rule of thumb, if your organizational structure is prohibitive to implementing some of the more in-depth controls, focus more on the monitoring-type controls mentioned. When employees are aware that quality management oversight is taking place, they are far less likely to commit fraudulent acts.

Another post will follow shortly with even more suggestions for internal controls over cash receipts at remote locations. Don’t forget to check back soon!