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    Fia Fa1 Recording Payments

    Uploaded by

    Alepha Tembo
    Controls over recording payments are important to prevent fraud and ensure completeness. Key controls include bank reconciliation, authorization of payments, supporting documentation, segregation of duties, and checking for unusual payments. Computerization can automate payment recording and produce checks, update accounts, and generate remittance advice. Automated credit systems like BACS and CHAPS electronically transfer funds, reducing paperwork and speeds processing but CHAPS is more expensive.

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    © All Rights Reserved
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    Fia Fa1 Recording Payments

    Uploaded by

    Alepha Tembo
    6 views14 pages
    Controls over recording payments are important to prevent fraud and ensure completeness. Key controls include bank reconciliation, authorization of payments, supporting documentation, segregation of duties, and checking for unusual payments. Computerization can automate payment recording and produce checks, update accounts, and generate remittance advice. Automated credit systems like BACS and CHAPS electronically transfer funds, reducing paperwork and speeds processing but CHAPS is more expensive.

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    Controls over recording payments are important to prevent fraud and ensure completeness. Key controls include bank reconciliation, authorization of payments, supporting documentation, segregation of duties, and checking for unusual payments. Computerization can automate payment recording and produce checks, update accounts, and generate remittance advice. Automated credit systems like BACS and CHAPS electronically transfer funds, reducing paperwork and speeds processing but CHAPS is more expensive.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    6 views14 pages

    Fia Fa1 Recording Payments

    Uploaded by

    Alepha Tembo
    Controls over recording payments are important to prevent fraud and ensure completeness. Key controls include bank reconciliation, authorization of payments, supporting documentation, segregation of duties, and checking for unusual payments. Computerization can automate payment recording and produce checks, update accounts, and generate remittance advice. Automated credit systems like BACS and CHAPS electronically transfer funds, reducing paperwork and speeds processing but CHAPS is more expensive.

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    © All Rights Reserved
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    FIA FA1

    REORDING PAYMENTS
    CONTROLS OVER RECORDING
    PAYMENTS
     Controls over recording payments are
    important to avoid fraud and to ensure
    completeness.
     Bank reconciliation is the most important

    control
    Controls over recording payments
    Controls to avoid fraud
     Bank reconciliation

     Authorisation of payments

     Supporting documentation

     Segregation of duties

     Check for unusual payments

     One cheque book in use


    Controls over recording payments
    Controls to ensure completeness
     Regular bank reconciliations to take place
     Cheques to be issued in sequence
     A sequence check to be carried out on the

    cheques entered in the bank ledger account


     Regular examinations of the bank statement

    to ensure all payments by direct debit and


    standing order have been recorded in bank
    ledger account.
    Further details on control procedures and
    reason
    Control procedure reason
    One cheque book in use at a time So as to keep rest of cheque books
    under lock and key – vulnerable to
    theft.
    Entering all cheques in bank ledger To ensure all cheques from cheque
    account even if cancelled book are recorded
    Retain all cancelled cheques Provide evidence that cheque has
    not fallen into wrong hands
    Writing cheques and recording in Its less tempting by an employee
    cashbook done by different people to act dishonestly
    Authorized details of standing So as to avoid recording wrong
    order and direct debits payments payments.
    filed and agreed before recording
    in bank ledger account
    Recording payments
    — Analysis of the bank ledger account payments will help to
    control the expenditure of the business.

    Posting the payments to the general ledger

    Step 1 Add up all the columns on the payments side of the bank
    ledger account.

    Step 2 Check that the analysis columns totals (excluding the


    discount received memorandum column) add up to the
    total cash paid column.
    Recording payments
     Step 3 Identify the general ledger account by marking against
    the bank ledger account amount.

     Step 4 Draw up the posting summary and post the general


    ledger.

     In a computer system, updating the payables ledger for


    payments will usually cause an automatic updating of the
    bank ledger account.
    Computerization of payments
    recording
     As transactions are recorded in payables
    ledger, cashbook will automatically be
    updated
     Option exists to produce computer printed

    cheques
     Cheques will automatically be produced from

    the ‘payments list’ that have been dated.


    Other tasks performed by
    computerized payment recording:
     Cheque will be printed out ready to sign.
     Balance on payable ledger account

    automatically updated
     Cash account in general ledger will

    automatically be updated
     Payable general ledger account will also be

    automatically updated
     Remittance advice will automatically be

    printed to be attached to cheques


    Automated credit system(ACS)
     Automated credit systems are useful methods of making and
    recordng payments and can save a business time.
     ACSs operate the electronic transfer of funds between
    accounts within the banking system
     The system acts as automated clearing system
     The business sends information that is input into its books to
    the bank for processing.
     ADVANTAGES OF ACS
     Operates with very reduced amount of paper work hence
    reduced operational cost
     Enhanced security of information
     Speed of processing
    Uses of ACSs
    Used in processing the following
     Standing orders
     Direct debits
     Monthly salaries
     Weekly wages
     Other one off payments
     BACS
     CHAPS
    BACS
     Bankers Automated Clearing System (BACS)
     A secure service enabling organizations to

    make payments directly into another bank.


     Used to make fixed regular payments such as

    salaries, pensions, tax credit etc.


     A cheap way to make payments
     Not suitable for same day payments as it

    takes on average 3 days.


    CHAPS (Clearing house automated payment system )

     It is a British company that offers transfers of


    high value transactions from one bank to
    another.
     Provides same day payment guarantee
     No limit on transaction value to be

    transferred
     Not available at all banks so limited service.
     Quite expensive service between £15 and £30

    per transfer.
    Procedure for using automated
    credit systems
     Entity to produce file with details of recipients
    (name, amount, bank, branch, account
    number).
     Information submitted to computer that
    processes it so as to be available to banks
     On specified day, bank credits recipients and
    debits entity
     Business records updated with same
    information
     Item recorded on archive disks for future
    reference.

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