FUND

MANAGEMENT
 CHAPTER PROLUGUE
○ The term management conjures up images
of placing a cash in bank for safe keeping .
○ Cash concepts and techniques are applied in
a wide range of activities.
○ There are a lot of good reasons why one has
to manage cash well.

3
1. First, at the core of business
operation, regardless of what
type and form of business they
are into
 a. Sole
proprietorship

b. Partnership

c. Corporation
Infographic Style

TYPES
OF BUSSINESS
ORGANIZATION
A. SERVICE CONCERN- the
business that render income to
earn income
B. TRADING CONCERN- these
are the business that sell to earn
income
C. MANUFACTURING CONCERN-
these are the business that convert raw
materials into finished products
 2.Second it is the 3. Lastly, This can
asset that is most be a good source
susceptible to theft
and abuse thus may
of additional
cause business income aside from
failures. normal operation.
HOW WELL DO YOU
KNOW CASH?

cash
Cash on hand
Represents as cash collection waiting
to be deposited on the bank.
Cash in bank
Represents the cash already
deposited in the bank.

A.Savings Account

B.Demand Deposits

C. Combo Account
RISKS
1. INHERENT RISKS-

2. CONROL RISKS

3. SYSTEMS RISKS
3.Cash fund

Funds are classified as cash:

a. Petty Cash Fund- this is the fund that will cater the small expenditures
of the company. This fund could either be maintained under the
imprest system or the fluctuating. The person handling this fund is
called PETTY CASH CUSTODIAN
b. B. CHANGE FUND- this fund is used to maintain loose change to
address the concern for small bills and coins.
c. Dividend fund- this is the fund used to pay dividends which the board
of directors have declared payable a time certain in the future.
4.CASH EQUIVALENT

-PAS (Philippine Accounting Standards)

- Short term and highly liquid investments
- Readily convertible to cash
- Acquired three months before maturity
If the term is three months of less ,such as instrument is classified as cash
equivalent

If the term is more than three months but within one year, such
investments are classified as SHORT TERM OR TEMPORARY INVESTMENT
and should be presented as separate current assets

If the term is more than one year , such investments is classified as non 13

current or long term investments. However if such investment will already

mature within a year ,then this will be considered as current assets
 BANK Products (interest are paid at
maturity date)
Overnight Placements

Weekly time deposits

Monthly time deposits

or 30-day time deposits
60 days, 90 days, 180
days, one year, 2 years, 3
years etc.

Trusts
 Government Securities

1. Treasury Bills

2.Treasury Notes

3. Treasury warrant
15

4. Treasury Bond
 ADA Corporation and Subsidiaries
Consolidated Statement of Financial Position
December 31, 2007
(Amounts in Million Pesos)
1.Cash Flow liquidity Ratio Cash& cash equivalent + Gauges the firm’s ability to
Trading Securities + Cash flow pay current financial
from Operating activities obligation by considering cash
/Current liabilities and other equivalents.

2.Days cash Average Cash Balance / Cash Indicates the ability of the firm
Operating Costs/ 365 days or to pay the average daily cash
360 days obligations.
The
breakdo
1.Cash on hand
wn of 2. Cash Fund
cash and
cash 3. Cash in banks
equivalen
ts must
4. Investments with
have less than one year
been:
maturity
How do we document cash?

1. PROVISIONAL RECEIPT
a. This receipt is issued by collectors, whether the cash or
check collection. This provisional receipt should be
surrendered by the collector everyday
b. This receipt will also issued by the office cashier in
case of check payments require 3 clearing days with
the banking system.
2. OFFICIAL RECEIPT
a. This receipt is issued by the office cashier in case of
cash payments.
b. This will also be issued whenever the collector remits
the cash collection to the office cashier.
C. This will also be issued for check collections for which a
provisional receipt was issued having passed the three day
clearing period
3. Sales Invoice
- Considered cash sales invoice
- Used as credit sales invoice
- There is a notation that in case the account is not settled within the prescribed credit
period, a case will be filled in the specified court.
a. The original must be given to the customer.
b. the duplicate must be given to the accounting department
c. the triplicate will be left in the booklet for the cashier’s copy. When the booklet
is left is fully used up, this booklet will be surrendered to the accounting
department for filing and for audit purposes only.
4. Daily Collectors Remittance form
This is the summary of the collection made by specified collector for the day.
this will be submitted to the office cashier together with the duplicate copy of the
provisional receipt.
a. the original copy together with the duplicate will be submitted to the office
cashier
b. The duplicate copy will be furnished without the duplicate copy of the
provisional receipt to the accounting department for recording purposes and audit purposes.
TIPS IN FORMATTING FORMS AND DOCUMENTARY EVIDENCE:

1. What are the information necessary so that the various concerns of

the control aspects could be addressed:
a. Date
b. Serial number
c. Is it thru manual operation or mechanical operation
d. Purpose
2. How big will these forms be
3. Filing
4. Distribution
5. The responsible employees who will handle it.
 Provisional receipt and official receipt must be registered with the
Bureau of Internal Revenue .

Examples of organizational chart of the company focusing in

finance and treasury department.

How Cash is Handled?

Position : Collector

Directly reporting to :

Daily Duties
1. Reviews the accounts receivable that are due for collection on that
day.
How Cash is Handled?
Position : Collector

Directly reporting to :

Daily Duties
1. Reviews the accounts receivable that are due for collection on that
day.
2. Follow up thru phone calls/ email.
3. Issues provisional receipts to customers who paid their respective
accounts.
4.Remits collection to the office cashier together with the daily
remittance form fully filled out.
Responsibilities:
1. Early or on time collection of the various accounts entrusted to him
for collection.
2. Report to the supervisor about the customer who are difficult to collect
from.
3. Report any feedback from the customer so management can address the
concern as early as possible.
Position :Cashier
Directly reporting to:

Daily Duties:
1. Issues official receipt to all cash received by the company.
2. Issue the official receipt to all check deposits made by customers.
3. deposits all cash collections up to 12 noon, within the day and all
cash collections after 12 noon, the following banking day.
4. Prepares the daily cash position report.
5. Payments from the entire fund he/she is entrusted to keep.
6. Requests replenishment of fund within the policy set.
Responsibilities:
1. Safe keeping of the cash collection.
2. Good relationship with the bank personnel .
3. Maintenance of all fund entrusted.
4. On time release of all check payments.
5. Placement of short-term investments.
6. Termination of short term investments.
Files to maintain:
1. Copy of the daily cash position report.
2. Copy of the validated deposit slip.
Position : Junior Accountant
Directly reporting to :

Daily Duties:
1.Recieves report from Cashier.
2.journalizes the cash receipts as evidenced by the daily cash
position report
3.Have it checked by the internal audit group and approved by he
accounting supervisor.
4.After approval, forwards the cash receipt journal to the general
accountant for the recording of the transaction.
5.Prepares the check voucher for payment of various accounts of the
company. This will include the required routinary government
contributions such as Social Security System, Philhealth and Pag-ibig
6.Have it checked by the internal audit group and approved by the
accounting supervisor.
7.After approval, forwards the check voucher and the check payment
to the cashier for proper release procedure.
Responsibilities:
1.All voucher whether the receipts or payments are done during daytime
otherwise, file it in the unfinished work file so that in case the staff is on
emergency leave, work can be done by other members of the accounting
department.
r
2.Report all problem to the accounting supervisor so that the concern can be
addressed properly.
Files to maintain:
Copy all the vouchers prepared for reference and audit.
Position : General Accountant
Directly Reporting to:

Daily Duties:
Recording transactions in the various books of accounts of the company.
Periodic Duties:
1. Prepare trial balance.
2. Prepares the working paper.
3.Prepares the financial statement.
4. Prepares the bank reconciliation statement.
5. Prepares suggested adjusting entries, have it checked by internal
audit group and approved by the authorized officer of the company.
6.Prepares Certification of SSS, Philhealth & Pag-ibig Contribution of the
employees once requested.
Responsibilities:
All entries made in the books of accounts are checked and approved by
authorized officers of the company.
Files to Maintain :
1.Books of accounts.
2. Original vouchers and documents.
3. Files of SSS, Philhealth & Pag-ibig Contributions.
Position :Accounting Supervisor
Directly reporting to:

Daily Duties:
1. Supervisor accounting personnel.
2. Approves all vouchers prior to entry in the books of accounts.
3. Analyzes the various reports coming from various departments to
countercheck the reports generated by the accounting department.
Periodic Duties:
1.Check accounting reports.
2.Reports the result of operation to the Board of Directors.
Responsibilities:
1. Financial Reporting
2. Tax reporting.

Files to maintain:
1. Accounting Reports.
2. Income Tax Payments.
Position :Internal Auditor
Directly reporting to:

Daily Duties:
Checks the documents coming from the cashier and from the Junior Accountant.

Periodic Duties:
1. Conducts post audit of the document and reports.
2. Conducts compliance audit. This is an audit check on the compliance of the
existing system of internal control installed by the company.
3. Evaluates of certain internal control mechanisms for enhancing its operation
and asset safely.

Responsibilities:
1. See adherence of all policies and procedures by various personnel of the
company.
2. Asset protection

.
The following control measures so that the cash will no be abused.

1. The VP for
2.From the policy
Finance should established , the head of
establish the the accounting
department should
policy on cash
prepare the procedure.
handling.

3. The implementation of the procedure is subject

to the review and audit by the internal audit group
or department so that continuous improvement on
the control mechanism may be done to address
the continuous and fast charging technology of
the company.
 The cashier receives the
money from collectors and
customers.

Depository bank

The General Accountant will

record the transaction. How will
receive the bank statement and
prepare the bank reconciliation.
Policy on cash handling :
1. The company should adopt the imprest system
handling cash.
2. The company should maintain the combo account
for easier tracking of banking transaction.
3. The company should place its money in various
banking companies so as the distribute the risk
involve in banking.
4. The following bank signatories will be observed
a) If the amount of disbursement is P50, 000.00 and below the following
will be the check signatories.
The Comptroller or the Head of the accounting department and to be
countersigned by the Treasurer or VP Finance.
b) b. If the amount of disbursement is more than P50, 000.00 the
following will be the check signatories.
The Comptroller or the Head of the accounting department and to be
countersigned by the Treasurer or President.
5. Official receipts can only be issued when cash is
received. Check payments received from costumers
or other persons will be covered by provisional
receipts.

6. All funds should be kept and maintained by the

office fund custodian. For the peti cash fund, should
request replenishment once the fund is at least 40%
used to avoid disruption of operation due to
insufficiency of the funds.
 PROCEDURE IN CASH HANDLING

1) The cashier upon receiving cash from the

customer or the company collector will issue
on official receipt.
2) The cashier will also issue on official receipt
for check deposits that are already cleared in
banking system.
3) The cashier will deposit the cash
collection up to 12 noon of the current day
intact within the day and money
collections after 12 noon will be deposited
intact the following banking day.
4) The cashier will then prepare the daily
cash position report.
5) The official receipt issued together with
the validated deposit slip and the original
copy of the daily cash position report will
then be forwarded to the accounting
department for file and the preparation of
the appropriate accounting entries and for
eventual entry in the books of accounts.
Common Misuses of Cash

LAPPING – This is a case of misappropriating a

collection from one customer and concealing this
defalcation by applying subsequent collection made
from one another customer.

KITING- This happens when a check drawn from one

depository bank and deposited bank at the end of the year.
There will be no entries made on this drawing and
depositing . This happens because there is poor internal
control . Poor control can be attributed to poor cash
management which is the essence of his book.
3. Fraudulent documents and evidence. Some
employees will make documents and piece of
evidence which are not really true.
 How is cash controlled?

1. Establishing good relationship with the bank officer .

There are some banks that are very short term time deposit investments like:
a. Overnight Placement . Just place your excess money during the day to an
overnight placement and terminate it the following day.
b. One week time deposit placement. The reason for this is that the excess money
could earn more while waiting for releasing of check payments to creditors and
payees.
c. Enter into a 30 day short investment- Depending on the cash needs of the
company. Under this classification, you could either get a treasury bill or treasury
warrant or treasury note .
1. The time deposit is a product of the bank and the liability in the bank while
the government securities are government products coursed thru banking
system eventual selling and are the liabilities of the government.

2. The time deposit is covered by the Philippine deposit insurance coverage of

P250,000 while the government notes are covered and backed up by the
Philippine government.

3. The interest of a time deposit can be received at the date of maturity while
the interest form government securities can be received at the date of
placement.

d. If we have any excess cash , while waiting for bigger investment yield, we can
place it in a long term investment in time deposit that will yield bigger interest and
assured of a steady rate of return of our money.

e. If we have found a good permanent investment that will make a better od a

yield then you can pre- terminate and invest it in that higher yielding investment
portpolio.
2. Identifying the various books where this cash transactions were recorded in
comparison with the various reports prepared.

3. Routine audit procedures to countercheck the books and reports there is the
employees duties, so that there will be no overlapping of functions and strict
adherence to company's policies and procedures.

4. The preparation of strategic planning, (more than one year to three year of
planning)

5. The preparation of a medium-term development plan (three year to five

year planning)

6. The preparation of a long-term development plan (more than 5 year

planning and consider the future of the company in carrying its vision/ mission.
Bills purchased is a form of discounting , but again if have a good liaison with the
bank officer, this can be waived .

Earmarking is an old terminology used many years back. Now the new term used in
the banking system is confirmation of deposit.

Bouncing Check means that the check you received was not funded and therefore
will not be cleared in banking system.
Concluding Learning

.1. In managing cash, you have to learn different bank accounts to open and funds to set
up.

2. In managing cash, documents are a must because accounting is objective.

3. In managing cash, should be oriented about its role in the account . Their duties and
responsibilities are vital for the achievement of the company’s goal of minimizing risk and
maximizing opportunities.

4 In managing cash, the company should have good representation with the banking and
financing companies so that it can get the best investment oppurtunities.
 How is cash controlled?

1. Establishing good relationship with the bank officer .

There are some banks that are very short term time deposit investments like:
a. Overnight Placement . Just place your excess money during the day to an
overnight placement and terminate it the following day.
b. One week time deposit placement. The reason for this is that the excess money
could earn more while waiting for releasing of check payments to creditors and
payees.
c. Enter into a 30 day short investment- Depending on the cash needs of the
company. Under this classification, you could either get a treasury bill or treasury
warrant or treasury note .
 How is cash controlled?

1. Establishing good relationship with the bank officer .

There are some banks that are very short term time deposit investments like:
a. Overnight Placement . Just place your excess money during the day to an
overnight placement and terminate it the following day.
b. One week time deposit placement. The reason for this is that the excess money
could earn more while waiting for releasing of check payments to creditors and
payees.
c. Enter into a 30 day short investment- Depending on the cash needs of the
company. Under this classification, you could either get a treasury bill or treasury
warrant or treasury note .