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receipts
are fundamental if the company is to keep a healthy cash 
position. 
Control over cash receipts 
will concentrate on three main areas. 

Receipts 
must 
be 
banked promptly
. 

The 
record of receipts must be complete
.
 

The loss of receipts through 
theft or accident 
must be prevented. 
The difference between these three controls can be demonstrated with an example.
6.4.2 Example: control over cash receipts 
Suppose that your company sells goods for $10,000 during the month of April to XYZ & Co. You receive 
a payment of $10,000 by cheque along with a remittance advice which shows exactly which invoices 
the cheque covers.
BPP Tutor Toolkit Copy

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PART C: ACCOUNTING AND REPORTING SYSTEMS, CONTROLS AND COMPLIANCE 
 
224
 
(a) 
You examine the cheque to ensure it is valid and completed correctly and you pay it in to the 
company account within 24 hours as company policy dictates (
banked promptly
). 
(b) 
A colleague records the cheque details and compares the amount of the cheque to the remittance 
advice (
checking for completeness
). Usually the payment would also be checked against the 
total amount owed by the customer as part of the completeness check.
(c) The 
segregation of duties 
between the person who banks the money and the person who records 
it is considered to be a very good control to prevent 
theft and accidental loss
. This prevents the 
fraud known as 'teeming and lading' where receipts for customers are misappropriated and this is 
then covered up by misposting future receipts. 
(d) 
Now that cheques can only be paid into the account in whose name they are made out, the 
opportunities for misappropriation of cheque receipts are much less. 
6.4.3 Controls over payments 
Controls over payments by a business must be 
strict
. This should apply to all payments, from the 
smallest to the largest. The need for controls should be fairly obvious: if any business allowed some of 
its employees to pay out its money without needing to obtain permission, the scope for cheating and 
dishonesty would be very wide. 
There are three main steps in applying controls over payments.