16 Sep 2008

Presented byMr Cheng Soon Keong, Director

Practical Aspects of Cash Management(Real life problems)

Agenda

The Perennial Resource / People Issue

Risks in Cash / Cheque Handling

Common Cash Management Tools

The Perennial Resource / People Issue $1.21 million Sean Lee went missing in October 2005

The Perennial Resource / People Issue

Roles and Responsibilities of Treasurer

Roles & Responsibilities of Treasurer Is a member of the Board Oversees finances of the organization Responsible for annual budget “Key person” for formulating financial policies and

procedures

Held responsible with personal liabilities?

The Perennial Resource / People Issue

Finding the Right Person

Sources Board members Support groups like NVPC Interest groups

Challenges Time / attention Honorarium?

Risks in Cash / Cheque Handling

Problems with cheques Forgery Room for “add-ons” “Cash Cheques” Who checked the supporting documents?

“ASSUME” Hunting down the signatories? “Boss say pay”

Risks in Cash / Cheque Handling

Problems with cheques: Space in front Cash

CashTwo Thousand Only 2,000.00Twenty 2

Risks in Cash / Cheque Handling

Problems with cheques: Forged signature

ABC Pte LtdTwo Thousand Only 2,000.00

Other Common Possible “Leakages”

Leakages in Revenue / Receipts Forgot to bill Forgot to collect Fundraising cost

Leakages through Liabilities Commitment Unauthorised commitment “Interested Party Transactions” Bulk Purchases

Standard Payment Controls Cannot

Detect

Common Cash Management Tools

Tools Pros Cons

Daily Monitoring Detect errors almost immediately

Resource intensive

Approval Limits Prevent unauthorised vendor, commitment or payment

Small, broken down payment amount bypass Board’s awareness

Supporting Documents

Proves the validity of the payment/receipt

Can be duplicatedNo time to review

Bank Reconciliation Detect errors usually at month-end

Errors found out too late

Budget Review Board’s scrutiny and clarification enquiries

Once a yearLack of knowledge

THE END