Do you believe you should assess the internal control risk over cash receipts as low, medium, or high? Why?

Question

Half Pint

Business

13 June, 20:15

Do you believe you should assess the internal control risk over cash receipts as low, medium, or high? Why?

+2

Answers (1)

Know the Answer?

Marie Abbott · Answer 1

HIGH

Explanation:

Whenever it has to do with cash, the risk is always high. The potential for employee fraud and accounting error cannot be underestimated. Controls must be in place to protect losses for small businesses and income leakages for big businesses.

Revenue is the biggest asset of a company and the first line in its income statement and cannot be assessed to be of 'low risk'

Internal controls should be in place for cash receipts in order to limit the access to cash to trusted staff, to verify all receipts, and that such transactions are captured correctly and timely. Cash receipts should never be used as petty cash as it creates tracking complexities.