Since the cashier handles books of accounts and cash is not deposited intact in the bank account the internal control system of the company is found very weak. There are the risks of cash being misappropriated. Examples could be:
Failure to record purchases properly in order to misappropriate cash.
misappropriation cash from a machine or whilst cash is in transit.
acceptance or solicitation of money or a benefit to provide cash to a third party.
acceptance or solicitation of money or a benefit to provide goods or services to a third party without taking a cash payment from that party.
This may create significant risk to the company that may erupt from the weak internal control system. Recommendations to company for the enhancement of the internal control system of the company are as follows:
The cashier should not have access to the books of accounts. The books of account should be handled by the accountants who should not be directly involved with the cash transaction.
All the cash collections should be deposited to the bank.
Cash payments should be made through the Bank.
Petty expenses should be managed through the Petty cash book, for which purpose the petty cash, imprest should be provided to the petty cashier through the bank.