Let me preface this by saying that I have an associate degree in
business (graduated 1975) with additional hours in intermediate and
managerial accounting, pre-1980.
I was taking an online advance accounting test for Robert Half today.
I missed a question that I was pretty sure I was right.
The question was does the person opening the company's mail deposit the
checks. True/False. I answered True.
My whole accounting career has been in hotel and restaurants. Since
1975 when I had my first accounting clerk job in a hotel, all of the
mail was opened by the General Manager's secretary. She removed all
checks regardless of the addressee. The addressee got a copy of the
check with copies of support. Checks arrived for one of 3 groups
typically (accounting to pay on AR, reservations to place advance
deposits, and catering/sales for group function deposits).
She would prepare three listings based on the above. Miscellaneous
checks (commissions) went to the accounting list. Each list was
accompanied by the copy of the check and the original back up received
with the check. She did a restricted endorsement to the back of the
checks, listed them on a deposit slip, and dropped them as a cashier
drop similar to deskclerks, cashiers, and bartenders. The general
cashier in accounting dealt with them the next day.
Transactions were posted by the appropriate departments from the
listings they received. This was a audit check point by all external
auditors since 1975 that I encountered. This was corporate policy
regardless of chain, i.e. Sheraton, Hilton, Westin, Ramada, Holiday
I missed this question. Has SOX changed this? Were we all doing it
wrong for 31 years?
BTW, the test was designed to test someone with the BS in accounting.
The recruiter had me take it to use to qualify me to his candidates
that really wanted someone with the 4yr degree. And, I am proud to say
I scored 86%. :-)
The idea is to segregate duties. This isn't SOX-specific, either. The
people who have custody of an asset should be different than those who
record and authorize it. If one person holds any two of those three
functions in general, it makes it MUCH easier to perpetrate fraud,
because it circumvents an otherwise useful system.
Think of it like this: If I have access to the checks when they arrive
(like, I'm receiving payments from customers), AND I can deposit them in
the bank, what's to stop me from pocketing that payment? A lot less than
if I'm only allowed to do ONE of those.
Granted, there may not always be enough "trusted" personnel to separate
duties, in which case other security measures should be taken -- like,
whoever reconciles bank statements should NOT also be the one depositing
checks or recording transactions.
Does this make sense?
You were violating one of the basic principles from Auditing 101
by having the same person open the mail and make up the deposit.
An acceptable scheme would be as follows; two people should be
involved, one who opens the mail and one who makes the deposit.
Both people must be in the room when the mail is being opened.
The person who opens the mail extracts any checks and makes a
list which IS NOT given to the second person. The checks are
then handed to the second person who writes up and makes the
deposit. A manager or auditor then compares the list made out
by the person who opened the mail to the deposit slip.
The theory is that if two people are involved there is a much
lower risk of embezzlement since collusion would be required.
Ok.. it is contrary to the practice that happened in varied hotels, not
related. I think the way it was viewed was, the person opening the
mail has no knowledge of what checks are due to come in. They didn't
do billing, they didn't take reservations, and they didn't book
functions. The people that did those duties who were they ones
expecting receipt of a check, never got to see the check.
The secretary could only record what came in the mail. The checks were
dropped, sometimes preparing an actual deposit slip, sometimes just
preparing a drop envelope for which was consolidated by the accounting
office's general cashier. The general cashier has no knowledge what
money was due to be dropped. They do not know how much any cashier
recorded on the POS, have no part of billing, or booking.
Isn't that enough division of duties. Not meaning to argue. Just
confused. As I mentioned, independent CPA firms audited our businesses
each year. Large hotel chains developed the procedures for their
companies, ostensibly to pass their internal audits. Now in the last
5-10 years segregation of duties have gotten harder to fulfill because
of staffing cutbacks.
At one country club the receptionist opened the mail recording the
checks on a listing, deriving the day's total. The checks were passed
to the AP person to post the payments into AR. The AR payment screen
doesn't show a balance, only the member's account number and name,
followed by the amount entered for payment. The AR person would see
payments posted to the accounts the next morning after update. The
controller who reconciles bank accounts and assists with stuffing
statements that the AR person prints had no part in that process.
Out of the 100 questions it was the only one I missed that I felt I had
gotten correct. It could be that the procedure that various hotels have
used, was a practice of segregation that dealt with existing staffing
that was typical in most properties except for the largest of
In my last hotel, the AR person was the general cashier. There was no
GM secretary, so the sales secretary opened the mail, removing all
checks, preparing the posting lists. She dropped the checks to the
general cashier (also the AR clerk). Given the staffing, this was the
best we could segregate. They don't allow budget to staff for
Thanks everyone for the info. I promise not meaning to be
Jerry Gitomer wrote:
Another process not mentioned in this thread is date stamping the checks
and logging them in. What if the person opening the mail takes too long to
deposit the checks? That person could stamp the checks with a future date
if he/she has a backlog of work.
This would cause more problems on the a/p side, especially with employee
reimbursements. "Where's my check, I sent in my expense report 2 week's
ago." Sorry, but I can send you a copy of the stamped page which proves I
received it only a week ago.
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