Automotive Dashboard – November
Techniques to Assess the Integrity of Cash Reporting: Part 2
Author:Sebastiano Banchitta, Manager | [email protected]
Daily Processing Procedures
The office manager should assess the daily procedures for recording and depositing cash. This should be performed as often as necessary. Documentation should be reviewed to confirm reported deposits mirror actual deposits.
Segregation of duties should be evaluated. The person collecting the money should be different than the person preparing the deposit slip.
Deposit slips should be compared to the cash receipts posting to confirm they agree. The cash receipts totals should be compared to the invoice totals being remitted. If deposits are less than receipts, chances are there is a cash handling problem in the operation. Any mismatch should be investigated further.
Compare the cash amounts on the deposit slip to how much cash was collected, repeat the procedure for checks as well. This procedure may help identify lapping if it occurred. Lapping is where an employee removes a check from the register before it gets recorded. The day’s sales are reported without the check. The next day the employee places the check in the register and removes an identical amount of cash. Your sales totals match your deposit totals, but you lost money. When cash totals and check totals do not match your records, this is an indication that someone is removing money from the register.
Equally important is the review of disbursements. Companies must confirm that all checks have an associated invoice or purchase order. Product invoices should require the initials of the person who confirmed delivery and receipt of the product. If the company writes scores of checks each month, a random review of the checks will suffice. Companies must retain all voided checks as evidence of voiding.
When assessing daily processing procedures, any anomalies should be investigated immediately. Results of the investigation should indicate whether modifications are required to the procedures in place to ensure the safe-guarding and proper reporting of cash.
Bank Reconciliations
Bank reconciliations explain the differences between the general ledger balance and the bank statement. When reviewing bank reconciliations, the following steps should be performed:
- Confirm the balance per bank statement agrees to the beginning balance of the subsequent bank statement. This will ensure the correct bank balance has been reconciled.
- Confirm the balance per books agrees to the general ledger. This will ensure the correct general ledger balance has been reconciled.
- Test the arithmetic of the reconciliation. Many reconciliations are performed using excel and sometimes cells affecting the computation may be hidden. Re-computing listed items will uncover any hidden cells when working with a paper print.
- Review deposits in transit, review aging, trace clearing to subsequent statement. For aged deposits, it is critical to identify the cause of the aging.
- Review checks that cleared, Who were checks issued to? Compare issuance date to invoice date, is time gap reasonable? Trace cleared checks to prior reconciliation.
- Look at cleared check sequences. If any checks clear significantly ahead of recent sequences, this could be a sign of a fraudulent check. Account for all checks and investigate missing check sequences.
- Outstanding checks, review age of outstanding checks. For older checks, determine if charge posted twice, once through payable and again as direct posting to expense. Were the older checks possibly not mailed? Then a re-class to payables may be in order. Trace cleared checks to subsequent reconciliation.
- Review adjustment items, items not posted, and aging. Investigate causes of unposted items and take corrective measures with regard to daily procedures.
Inquires and analysis of the components of bank reconciliations will shed light on any issues affecting cash reporting as well as safe-guarding this important asset.
Proof of Cash
It is recommended this procedure be performed by an auditor. The auditor can prepare a four-column bank reconciliation, also known as a Proof of Cash. This procedure can shed light on error, misstatements, and fraud. The proof of cash reconciles the bank balance and general ledger over a specified period of time, whereas, the standard bank reconciliation reconciles the two at a specific date.
Summary
In summary the above procedures do not represent an exhaustive list, however they are a good start to assessing the integrity of cash reporting. Regular review of the cash accounts in this way will lead to spotting existing or potential problems and afford management the opportunity to ensure corrective measures are employed. Most importantly is to follow up on corrective and preventative measures and assess they are operating effectively.
Motor Vehicle Commission Audits Dealerships
Author: Christine Andrews, Automotive Consultant | [email protected]
In addition, reassignment books are being examined for missing information such as driver license numbers, buyer’s information, odometer statements and corporate codes.Also, the NJMVC requires a dealership to maintain a New Car Inspection Decal Log. The log should be accounted for in numerical order and include the inspection decal number, plate number (if applicable), date of issue or void, year, make and vin of the vehicle the sticker is affixed to, name, address and driver’s license number of the registrant of the vehicle.
The dealership must keep the log for a minimum of five years. All voided decals must be retained by the dealer. Lost or stolen decals must be reported to both NJMVC and law enforcement. A motor vehicle dealer who fails to produce the log, voided decals or fails to report lost or stolen decals may be subject to having their dealer’s license suspended or revoked.
We encourages all dealerships to conduct a self-audit to make sure they are compliantwith NJMVC’s requirements, so that you are covered in case of an NJMVC audit.
Employee Benefits Survey
Author: Louis Young, Director of Client Services | [email protected]
For the third year, Withum has been involved with preparing and writing the NJCAR Health Insurance Survey. The intent of this paper was to provide usable data to assist in making health insurance decisions. One of the main concerns facing most dealers is the competitiveness of plan designs being offered. The strategies utilized in retaining equitable insurance rates included changing carriers, reducing benefits, the use of a high deductible health plan and passing on an increase to employee contributions.
Based on the responses from the survey, the average annual cost for health insurance among dealer respondents was $5,856 for single (employee only) coverage. Couple costs averaged $13,560, parent/child costs averaged $11,544, and family costs averaged $20,220. Employer contribution costs, as a percentage of premiums, were 47 percent for single coverage and dependent coverage costs ranged from 47 percent to 50 percent.
Putting some perspective on this survey we looked at the results of the recent NJBIA 2016 health benefits survey. Overall, the average annual cost of coverage for a single in the NJBIA survey was $7,044. A couple was $14,076, a parent/child only was $11,628 and a family was $17,580.
As seen within this report, there are many variables to consider. Carrier selection, plan design, funding arrangements and employee contribution strategies are all primary concerns. By better understanding what others in our industry are doing, and in the marketplace in general, dealers can make more educated decisions to best meet the needs of their own organizations and valued employees.
