Cash Disbursements Controls

Cash disbursement controls are internal procedures designed to safeguard cash outflows in a business.

These controls help prevent fraud, errors, and unauthorized payments by ensuring that only valid and approved expenditures are made.

Consider Prim Corporation.

When the corporation receives office machinery, the accounts team verifies that the purchase order, the receiving report confirming delivery, and the supplier's invoice all match before releasing funds.

It also segregates duties, for instance, the procurement officer approves the purchase, the accounts team prepares the check, and the finance manager reviews and authorizes the disbursement.

This separation ensures that no single individual controls all aspects of the disbursement process, reducing the risk of errors or fraud.

Prim Corporation uses pre-numbered checks to track payments and confirm that no checks are missing or duplicated. These checks are accessible only to authorized personnel, preventing unauthorized access.

Together, these procedures help Prim Corporation maintain accurate, authorized, and accountable cash disbursements, protecting the company from financial mismanagement.