Discuss whether you think the same person who receives cash payments should also prepare the bank reconciliation. Give a least one reason to support your answer.

Answer 1

No. A well planned internal control manual of policies and procedures advises against integrating duties where the employee both has custody and recording functions, custody or detecting functions, or some combination of such duties. In this case, the employee has both custody of the asset to be safeguarded and the detecting of any misappropriations of those assets. In the case of cash, an employee can engage in embezzlement of cash and be able to cover it up. Two ways that the embezzler can get away with it is by kiting and lapping.