Which of the following is NOT an internal control activity for cash?

• A. Limiting access to cash to authorized personnel only
• B. Requiring bank reconciliations to be performed regularly
• C. Segregation of duties related to cash handling
• D. Recording cash receipts only at the end of the month

Answer: (D)

Verified step by step guidance

1. Understand the concept of internal control activities for cash: Internal controls are processes and procedures designed to safeguard assets, ensure accurate financial reporting, and promote operational efficiency. For cash, these controls typically include limiting access, segregation of duties, and regular reconciliations.
2. Analyze the first option: 'Limiting access to cash to authorized personnel only.' This is a standard internal control activity as it helps prevent unauthorized access and potential theft or misuse of cash.
3. Analyze the second option: 'Requiring bank reconciliations to be performed regularly.' Regular bank reconciliations are a key internal control activity to ensure that the cash balance in the accounting records matches the bank statement, identifying discrepancies promptly.
4. Analyze the third option: 'Segregation of duties related to cash handling.' Segregation of duties is a fundamental internal control principle that reduces the risk of errors or fraud by ensuring that no single individual has control over all aspects of cash handling.
5. Analyze the fourth option: 'Recording cash receipts only at the end of the month.' This is NOT an internal control activity because delaying the recording of cash receipts increases the risk of errors, theft, or mismanagement. Proper internal controls require timely and accurate recording of transactions.