Mr. Jerry Mays
Manhattan Company
Main Street, USA

Dear Mr. Mays:

During my audit of your financial statements, I reviewed the internal controls over your cash receipts. I discovered many glaring weaknesses and I’ve prepared few suggests to improve your overall transparency when it comes to your employees dealings with the company money.

1. The person who opens the mail should not prepare a list of checks received.

This list should be prepared so that it can later be compared with the daily cash summary. While this procedure does not assure that all checks will be listed, it does allow the company to verify that all checks on the list did get deposited. Which is essential to make sure employees don’t try to fraud the company.

2. Only one person employed by your company should open the mail.

When this occurs, there is no guarantee that all incoming checks are forwarded to the cashier’s department.

3. The cashier should be the only person allowed to open the mail.

Under this procedure it is possible for the cashier to open the mail, prepare the cash summary and make the bank deposit. This involves no segregation of duties as the cashier controls the cash from the time it is received until it is deposited in the bank.

4. The accounts receivable clerk is allowed to open the mail.

In this case, there is poor segregation of duties because the clerk could write off a customer’s account as uncollectible and then misappropriate the collection when it’s received.

5. Mail receipts should be deposited weekly.

If you continue to take the approach on not make daily deposits this makes the receipts vulnerable to robbery and to misappropriation the receipts should be deposited intact daily.

Hopefully these few suggestions will help you increase your internal controls. If you have any questions please fill free to contact me.]