IN MY previous column, I have stressed the importance of cash management vis-à-vis cost management in ensuring profits for the business. Cash management begins with knowing how much cash the business has and in what type or form the cash is. This is best done through the use of accounting schedules.

The term accounting schedules seem uninteresting when it is heard or mentioned. This lackadaisical perception of accounting schedules stems from the lack of understanding of their use and the appreciation of their importance. Accounting schedules are monthly reports submitted by accounting department to the users of said reports who definitely know their importance and usefulness.

Some of the common accounting schedules for cash and cash equivalents are the following:

Petty Cash Fund

Cash on Hand

Cash in Bank and Average Daily Bank Balance

Bank Reconciliation

Cash Reconciliation

Cash Flow Projection

The common users of Accounting Schedules for Cash and Cash Equivalents are the following:

Finance manager

The finance manager is primarily concerned with the financial impact of business operations. He is responsible for cash management and cost management; hence, the profitability of the business. In coordination with the treasurer, he is responsible for making cash available, while ensuring that operations is conducted at the least cost.

If a company has provincial or global branches, sales offices or manufacturing plants, it is the finance manager’s responsibility to ensure that funds are transferred from the branch bank accounts to the Head Office bank account at the least cost and time. Hence, he reviews these schedules regularly.

Controller

The controller ensures the integrity of the financial statements including the correctness and existence of the recorded cash and cash equivalents. He reviews the schedules monthly and ensures that they reconcile with the general ledger or the book of the business that is used to prepare the financial statements.

Treasurer

The treasurer monitors the availability of cash for the business. He is responsible for placing excess cash in short-term placements. If funds are lacking, short-term or long-term loans are recommended by the treasurer to the board of directors.

Internal auditors

Internal auditors use accounting schedules to check compliance with various standards and policies established by the business, government agencies and accounting bodies. Internal auditors check if accounting schedules for cash and cash equivalents are prepared monthly and use these schedules to perform audit procedures on all of the cash accounts such as cash count and review of the schedules to check propriety. Internal auditors are the eyes and ears of management.

External auditors

External auditors request every year-end audit for copies of accounting schedules to check compliance with various standards and policies. However, focus is made on compliance with accounting standards particularly on the existence, ownership and availability of the reported cash and cash equivalents. External audit procedures are quite similar with internal audit. However, audit procedures are no longer done if cash amounts are immaterial.

Bureau of Internal Revenue and other government agencies

BIR’s objective is to collect more taxes. Accounting schedules for cash and cash equivalents may be used by BIR examiners to determine the reasonableness of declared revenues and expenses.

Users of accounting schedules have different objectives in performing their respective functions. However, accounting schedules for cash and cash equivalents serve the following common objectives of the users:

Report and check the details of financial items shown in the balance sheet and income statement.

Report and know a financial condition or an operational performance of the business that are not presented in the financial statements for reasons due to immateriality and irrelevance.

In my next article, I will discuss in more detail the said two common objectives of the various users in their review of cash and cash equivalent accounting schedules.

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Joselito R. Ocampo, a Certified Public Accountant, a Doctor in Public Administration and an Entrepreneur, is the Managing Director of J.R. Ocampo Consulting and Professional Services. For queries and comments please call 0917-5057341 or e-mail at joselito.regala.ocampo@gmail.com.