A lender's covenant or a raise means someone outside the company signs off on your numbers, on a date. Cash & Bank gets you ready. Every bank and card transaction matched to your books and your approvals, so the bank and the books agree every month.
What it checks
- Reconciliation complete. Every bank transaction in the period matches an entry in your books, or is listed as still to be matched, with its age.
- Balances tie. The bank balance at month end equals the cash balance in your books, plus the items still to be matched.
- Payment to an approved account. Every payment goes to the account on the supplier's record, and a payment to a new or changed account is flagged.
- Authorisation limit. A payment above the limit you set has a recorded approver.
- Unusual disbursement. A payment outside an account's normal pattern, in size, payee, day or frequency, is flagged with the amount.
- Duplicate payment. The same payee paid the same amount twice within 30 days, across bank, card and books, is flagged as a duplicate.
- Recurring charge still in use. A recurring charge with no named owner or no sign of use is raised as a question: confirm it is still in use.
- Card charge without support. A card charge above your receipt threshold with no receipt or invoice in the Data Room is flagged.
- Spend within policy. A card charge is checked against your card policy, its categories, limits and merchants, when you have given one.
A finding, in its own words
Payment of $4,800.00 on 12 August went to an account that is not the one on the supplier's record, which has been unchanged since March. The account changed on the invoice dated 9 August, three days before the payment.
Notion charges $96.00 a month on the Ramp card. I cannot find an owner or any sign of use in the last 90 days. Confirm it is still in use, or name the owner, and I will stop asking.
What it may ask you
- How many days can a bank item sit unmatched before you want to hear about it? Unless you say otherwise: 30.
- How many times bigger than a normal payment counts as unusual for an account? For example 3 times. Unless you say otherwise: 3.
- Any accounts where big regular payments are normal? For example a payroll sweep account.
- Who owns each recurring charge on your cards? For example 'Notion: Sam'.
- Any rules for card spend? Category limits or blocked merchants, like 'no alcohol' or 'travel under $500'.
What it draws on
- The bank and the books agree. COSO Control Activities, principle 10; SOX: Cash reconciliation.
- Money goes only to approved accounts. COSO Control Activities, principle 10; SOX: Disbursement authorisation and payee validation.
- Changes to master data are controlled. COSO Control Activities, principle 11; SOX: Master file maintenance controls.
- Authorisation of transactions and changes. COSO Control Activities, principle 10; SOX: Authorisation of transactions.
- Unusual payments are noticed. COSO Monitoring Activities, principle 16; SOX: Disbursement monitoring.
- No transaction is recorded or paid twice. COSO Control Activities, principle 10; SOX: Duplicate payment prevention.
- Recurring charges have an owner and a use. COSO Monitoring Activities, principle 16; SOX: Expense validity.
- Card spend is supported and within policy. COSO Control Activities, principle 10; SOX: Corporate card controls.
- Transactions are supported by documents. COSO Information and Communication, principle 13; SOX: Audit trail and supporting evidence.
What it needs
- bank statements, or the bank transactions themselves through a Connection
- card transactions
- receipts and invoices for card charges, so a charge has support
- your approval limits and card policy, asked for only when a check needs them
- Connections, optional: Mercury, Brex, Ramp or your bank for the transactions, and QuickBooks or Xero for the books they are matched to. A statement is enough to start.