What internal controls are needed for cash disbursements?
According to Price Waterhouse’s booklet, Effective Internal Accounting Control for Nonprofit Organizations: A Guide for Directors and Management, the objective of internal controls for cash disbursements are to ensure that cash is disbursed only upon proper authorization of management, for valid business purposes, and that all disbursements are properly recorded. While it is impossible to guarantee that these objectives will be met at all times for all transactions, the following practices provide reasonable assurance that they will usually be accomplished. Segregation of Duties Segregation of duties means that no financial transaction is handled by only one person from beginning to end. For cash disbursements, this might mean that different people authorize payments, sign checks, record payments in the books, and reconcile the bank statements. If your organization is a small nonprofit, managed by volunteers and possibly one staff person, this principle can be hard to put into practice
