Published: September 15, 2021
Looking for a way to improve your game when it comes to cash receipting internal controls? Add the double count to your arsenal. The double count is as easy as the name suggestions: money should never transfer from one employee to another without being counted and documented first.
Though it’s simple, the double count is a necessary addition to your internal control processes for minimizing the risk of loss . Let’s walk through a few scenarios to illustrate the concept and its importance.
Scenario 1: Fundraising in a school
The students in your community’s high school hold a door-to-door fundraiser and collect a whopping $23,000 in one day. The coach drops it off with the Associated Student Body (ASB) clerk. He leaves her the cash, and she counts and records the $23,000. Let’s say the coach questions the ASB clerk about her count later on, thinking there was actually $25,000. What should the coach and ASB clerk have done to prevent any misunderstanding?
- The school’s internal controls should have required a double count! The documented double count becomes an agreement of how much money one employee is giving to another who is assuming responsibility for it. In this case, the coach should have recorded his count, and the clerk should have issued the coach a receipt upon counting it out again in his presence.
Scenario 2: Combining a deposit
A municipal court has three cashiers who each turn over their respective collections to the back office clerk at the end of the day. The back office clerk later recounts the three cashiers’ collections and makes a combined deposit. If there’s a shortage, who’s responsible?
- The loss could be attributable to either the cashiers or the back office clerk. Now what? You can’t place responsibility on any one employee because more than one person had the opportunity to lose or take funds. The bottom line is that each employee needs to count the money in the other’s presence and document the amount transferred—the double count! The documentation for the counts also provide a record that the supervisor or manager can use to ensure the deposit was made intact.
Scenario 3: Supervisory recounts of day’s collection
A public utility district’s deposit is recounted multiple times by three different employees: the cashier, head cashier and a supervisor. The deposit is locked in the safe between every individual count, but each the three employees accesses the safe independently when performing the counts. What’s the weakness here?
- Just like in the previous scenario, if a shortage occurs, you couldn’t assign loss to any one person. The act of counting the deposit will only identify if a loss has occurred. In this case, counting would not tell us who was responsible for the loss. Even if the safe was sophisticated and tracked user access, there could still be an issue (although, it would help narrow the possibilities). For example, if the cashier puts a shorted deposit into the safe, and the supervisor later counts and realizes its $200 short, they both could have taken funds. However, if they count in each other’s presence, it becomes clear that the cashier is responsible. (Note: It’s not the best use of resources to recount the funds this many times; it only increases risk.)
Does your government’s cash receipting internal control process require the double count? Do you see yourself in any of these scenarios? If so, it’s time to improve your processes. Not sure where to start? We have a suite of resources available to help you:
- Cash Receipting Guide with best practices for leadership, cashiers, managers or supervisors who monitor the funds
- Cash Receipting Internal Control Checklist to help you review your controls
- Segregation of Duties Guide, cash receipting chapter
- Self-assessment checklist from the Segregation of Duties Guide (in Excel format)
We’re here to help!
Do you have additional questions about the double count or other internal control practices? We’d be happy to help. Contact one of our financial management specialists at the Center for Government Innovation at Center@sao.wa.gov, or submit your specific technical accounting questions to our HelpDesk in the client portal.