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Financial ManagementInternal Controls - Cheque TransactionsCheque preparation and safety methods for payments: Who the cheque signatories : In an organisation mostly the cheques are signed by more than one person (Joint Account). This is done to ensure the safety and transparency. Who keeps the cheque books: The signatories of Bank Account should not have access to the Cheque books. So accordingly the cheque books should be in the possession of another person who is authorized by the Chief Functionary of the organisation/ Executive Committee. The best way to pass resolution to this effect in the Executive Committee meeting. A written document on this should be kept in the files. Keeping signed Cheques: Signed blank cheques should not be kept. Some organizations may do this i) keeping signatures of one of the authorized signatories – this is done in case the other signatory is not around and stay in a distance place. Hence it is always advisable to see that both signatories are available around. ii) keeping blank cheques or putting amount on the cheques signed by both the signatories – this is done when both the signatories are away for some time and to see smooth running of day to day organizational activities. iii) Also done in some cases when the project operational area is away from the main office. Again you need to take proper precautions in such situations. Even if the signed cheques are given, in whose name these are deposited at project level. If they do not have project level bank account . What you should do? In this case you should first prepare a list of payments that need to be made during the absence of the signatories. As far as possible the cheques should be prepared in the name of the parties who the payments needs to be made. Ensure that these are A/c payee cheques. In case drawing cash for routine work as per the organizational limits – again prepare a list of likely routine payments date-wise and on that basis prepare the cheques of smaller amounts. Again in this case, to ensure safety, some organizations does give these cheques in different individual staff names and some also show as an advance to that particular staff. Once the payments are made the advances against the staff are settled. Again giving advances in staff name for organizational ppurposes is also not a good practice- however, to ensure safety this is done. For all these signed cheques, a note should be prepared giving details of cheque and signed by the Chief Functionary and the concerned staff. See More...... ~ ngoportal 02/09/2014 |
