Week 3 Discussion Forum 1 Required Resource Textporter G Nor ✓ Solved

Week 3 Discussion Forum 1required Resourcetextporter G Norton

Discuss how management can control cash, the tools used, the company's cash balance, and whether it has too much or too little cash, supported by facts. Also, explain management's responsibility to establish internal controls, providing a real-life example. The initial post should be at least 200 words, and support your response with at least one scholarly or credible resource, in addition to the textbook.

Sample Paper For Above instruction

Effective cash management is fundamental to a company's financial health, ensuring liquidity while maximizing profitability. Management controls cash primarily through internal controls, cash budgets, and bank reconciliations. Internal controls include segregation of duties, authorization procedures, and periodic audits, which are designed to prevent theft or misappropriation of cash (Porter & Norton, 2018). Tools such as cash flow statements and cash budgets help management forecast cash needs, identify surplus or shortages, and make informed decisions regarding investments or financing.

Considering a large retail corporation like Amazon, its annual financial statements reveal a substantial cash balance, often exceeding several billion dollars. For instance, Amazon's cash and cash equivalents were approximately $60 billion at the end of the fiscal year, which is substantial but justifiable given its vast operational scale. Whether the company has too much or too little cash depends on its operational needs and investment opportunities. Excess cash may suggest inefficient utilization or risk of idle assets, whereas too little cash could hinder operational liquidity and growth opportunities. Analysis of Amazon's cash flow statements indicates healthy operational cash flows, supporting its strategic initiatives without excessive idle cash (Amazon, 2022).

Management's responsibility extends beyond controlling cash to establishing a comprehensive internal control system that safeguards assets and ensures accurate financial reporting. For example, in a previous retail employment, management implemented strict cash handling procedures, including cash registers with limited access, daily reconciliation, and receipt verification. These controls have documented success in reducing theft and errors, thus protecting company assets. Such measures exemplify the importance of internal controls in maintaining financial integrity and operational effectiveness. Overall, effective cash control and internal controls are vital for supporting sustainable growth and maintaining stakeholder confidence (Dimitrijevic, Milovanovic, & Stancic, 2015).

References

  • Amazon. (2022). Amazon annual report 2022. https://www.amazon.com
  • Dimitrijevic, D., Milovanovic, V., & Stancic, V. (2015). The role of a company’s internal control system in fraud prevention. eFinanse, 11(3), 34–44.
  • Porter, G., & Norton, C. (2018). Using financial accounting information: The alternative to debits and credits (10th ed.).
  • Salem Press Encyclopedia. (2019). Sarbanes-Oxley Act of 2002. Retrieved from Salem Press database.
  • Gaetano, C. (2017). 15 years later, does SOX still matter? The Trusted Professional.
  • King, D. L., & Case, C. J. (2014). Sarbanes-Oxley Act and the Public Company Accounting Oversight Board’s first eleven years. Journal of Business and Accounting, 7(1), 11–22.
  • Articles from ProQuest and Credo Reference databases providing insights into internal controls and SOX legislation.
  • Edspira. (2014). Sum of the years' digits depreciation. [Video].
  • ProfAlldredge. (2017). Double-declining balance depreciation method. [Video].
  • Website: Sarbanes-Oxley Act 2002. https://www.sox.gov

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