When two employees share the same cash register, it can be a violation of internal control principle 1—quality control.
quality control principle 1 states that a person or entity must make certain that the product or service being sold is of the same quality as the other products and services being sold.
Because two people can not independently make sure that the two cents they receive are the same as the one cent they paid for, this principle means that there must be a way to verify that the money you paid was really a single cent and not fraudulently obtained cents.
This principle does not apply to noncash products such as food or drinks because those have nonverifiable qualities such as taste or effects.
Control procedures
One point that comes up frequently in debates about financial management is which internal control procedure should be used for which business area.
People tend to say that they follow the one and only proper control for their business, but in reality they are placed under many management styles and control heads.
This is not just true in corporate America, but in a small business where there is only one cash register, there is an extra need for control than in a large business with multiple registers.
Control head can be left at the location or it can be brought to the location. Either way, it must be kept active and up to date.
segregation of duties
One of the most common violations of segregation of duties occurs when one person shares the responsibility for operating a cash register. This violation can occur when one person is the inventory control person and the person operating the cash register, or when one person is in charge of determining customer payment methods and overseeing inventory submission.
In either case, there is a violation of internal control principle two: accountability and tracking. Bothventory control person and cash register operator must be held accountable for each transaction they process.
Accountability requires both people to feel that they are being recognized for work they are doing. When one person has total authority over a transaction machine, this can create confidence in them to make decisions right away and process a transaction correctly.
Tracking records requires accountability as it requires both people to enter data into the record entry machine. It also requires them to keep track of each transaction they process so that they can determine if an order was placed, who ordered what item(s) and how much money was paid for each item(s).
adherence to procedures
In some situations, having two cashiers working on the same shift can be considered following procedure. In this scenario, they are both following their assigned roles and instructions to offer assistance to customers.
In theory, this is how two people would answer the same customer’s payment questions and process their payments. However, in this scenario, one person is receiving the payment information from the computer and manually entering it into the register while the other receives it verbally and helps process it.
In this scenario, both clerks are following their assigned roles and instructions. They are only doing one job well at a time, but in this case, each takes their turn doing something. This is good management practice in taking turns!
However, in this case there is clearly a conflict of interest occurring as one of the clerks is receiving an increased paycheck as compensation for leadership role.
independent checks
Another potential violation of internal control is when one employee handles both cash register functions for two different businesses at the same time.
This occurs when two employees share the same cash register and/or shift, or two employees work at different businesses at the same time. It also occurs when two employees work at the same business but with different locations due to shared equipment or logistics.
In this case, one employee is responsible for making sure that the proper accounts are set up and that those accounts are being used correctly. The other person is responsible for making sure that the customer service rep is responding to calls and emails properly.
These violations can occur when a single person takes on too many responsibilities or takes on roles in which they do not have additional duties.
periodic reviews
Another control principle that must be addressed is periodic reviews of all internal controls. This includes reviewing the effectiveness of internal controls, seeing how well they work, and changing them if necessary.
There’s a reason for this: we rely on them to help us make sure our business is operating in a transparent, efficient way. Without these reviews, people can get distracted and forget to apply the right principles and standards to their jobs.
It’s even more important in an organization where money is involved than it is in an individual-based one. If one person doesn’t follow the policy of no missing checks or accounts, then another person who applies the same policy should not face the same consequences.
This applies not just to checks and balances between departments, but between individuals as well. If one employee misses a review meeting because they were too busy to attend immediately following the previous meeting, then another should be notified immediately that they need to bring their attention to this new matter.
documentation
Another important control principle is documentation. This can be a hard-and-fast rule, or it can be something that is practiced but not always believed.
In this age of technology, you can have the best technology in the world, but if you do not have documentation to support and support and support your cash register system, then your system is no better than any other cash register system out there.
You have to have detailed documentation of all your transactions, including how much each customer paid and when the sale was completed. You also have to have detailed records of whom each gift was purchased for, what gift was received, and when it was received.
These kinds of records help identify problems early so they can be fixed.
security controls
Internal control refers to processes that are designed to ensure compliance with company policies and regulations. A well-designed internal control includes procedures for detecting and preventing fraud, errors, and other improper activities.
Fraud is a common enemy of internal control. If someone is paying money to your company, they may think they are buying something valuable that will serve their needs 100% of the time. This can lead to overconfidence in the fraudster’s ability to always make the right decision at every turn.
Error detection and correction protocols help prevent falsely positive and falsely negative transactions, respectively. By having these in place, it makes it more likely that employees are doing their jobs correctly when receiving payments at work or at events.
Consistently high error detection and correction rates indicate that a system is working properly and being used appropriately. When one person receives a payment but another does not, this indicates that the former has been able to detect any errors resulting from the transaction.
compliance with policies and procedures
Compliance with policies and procedures is also important in ensuring that the right people are collecting the right money. If an employee pockets thousands in cash while processing customer payments, then this person is not doing their job in accordance with company policy.
By having one person handling all customer payments and the cash register, that one person must follow all company policies regarding receipts, confiscated items, and other details. This person also needs to keep track of who owns what credit card and which purchases are eligible for reimbursement.
It is important for these employees to keep these records for possible review as well as testifying at a reimbursement hearing if something goes wrong. Having this level of control from each individual is essential to ensuring proper reimbursement.
