Fund Management
How do value cash?
- Cash is valued at face value. For cash dominated in
foreign currency, like the US dollar, Japanese yen,
etc. this should be converted rate (current rate would
mean the rate on the last banking day at the end of
the accounting period. If the deposit is placed in a
bank having a financial difficulty, the face should be
written down to estimated realizable value.
Example
Assume that ADA Corporation, has a dollar
account with Security Bank Corporation with a
balance of 350 US dollar. Since our financial
reporting is in peso currency, we have to convert this
dollar to its peso equivalent using current rate. By
using current rate, we mean the rate at the end of
accounting period. This dollar account purchased by
the company in May,2009 for 48.50 pesos equivalent
of 16,975,000 pesos.
If at the end of December 31,2009 the current
rate was 48 pesos to dollar. Then the balance of the
ADA Corporation at December 31,2009 will show
16,800,000 pesos.
Due to this, ADA Corporation has incurred a
forex loss of 175,000 pesos. This concept will hold
thru with other currencies which business
enterprises may maintain in any banking and
financial institution.
For business enterprise’s bank current with a
having financial difficulty or closed bank operations,
then this account will be presented at net realizable
value which equivalent to the amount of insurance
by PDIC or Philippine Deposit Insurance
Corporation.
How do we document cash?
Documenting cash is essential for it is in this
way that we are assured that our cash is properly
documented with evidence to support the
transactions as it is entered in the books of account.
1. Provisional Receipt
a. Normally, this receipt issued by collectors,
whether cash or check collection.
b. this receipt will also issued by the office of
cashier in case of check payment.
This provisional receipt must be in triplicate.
a. The original must be given to the person paying.
b. The duplicate must be given to the cashier
together with the collectors remittance form; and
c. The triplicate will be left in the booklet for
reference, when the booklet is fully used up, this
booklet will be surrendered to the office for
safekeeping and reference for audit purposes only.
2. Official Receipt
a. This receipt is issued by the office cashier in case
of cash payments.
b. This will also issued whenever the collector remits
the cash collections 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.
This official receipt must be in triplicate.
a. The original must be given to the person paying.
b. The duplicate must be given to the accounting
department for recording; and
c. The triplicate will be left in the cashier’s copy,
when the booklet is fully used up, this booklet will be
surrendered to the accounting department for filling
and audit purposes only.
3. Sales Invoice- ordinary sales invoice are consider cash
sales invoice. Normally, when sales invoice are 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 held in the specified court.
Sales invoice must be in triplicate.
a. The original must be given to the person paying.
b. The duplicate must be given to the accounting
department for recording; and
c. The triplicate will be left in the cashier’s copy, when
the booklet is fully used up, this booklet will be
surrendered to the accounting department for filling and
audit purposes only.
Daily Collectors Remittance form- this is the summary
of the collection made by a specified collector for
day. This will be submitted to the office cashier
together with the duplicate copy of provisional
receipt.
Tips in formatting and documentary evidence:
1. 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 form be
3. Filling
4. Distribution
5. The responsible employees who will handle it
The documents, must be registered with the Bureau
of Internal Reveneu.