In Zoulman Bhd, Mr Nizaam was concerned about the management of the physical cash and the recording process of cash transactions in the company. He and his team had carried out an investigation to evaluate the current state of the cash handling and recording process in the company. Upon investigation on the cash receipts process, the team discovered that the cash received on daily cash sales are kept by the cashier in the locking drawers and cash registers during business hours. The cash are securely locked when the cashier take a break. They also found that more than one cashier has access to the same locking drawers and cash register. At the end of the day, all cash receipts are counted by the cashier on duty but without any supervision. The cashier will relocate the cash receipts into the safety box in the main office and record the cash receipts into the logbook on their own. On the following day, Ms Lamya, a junior account assistant, will record yesterdays cash receipts into the cash book based on the logbook and without recounting the physical cash in the safety box. At the end of the week, all cash receipts will be deposited to the bank by Ms Lamya herself. She will then enter the records about the deposits of cash in the bank into the cash book. Ms Alyia will verify the transactions in the cash book every week by referring to the bank-in deposit slips. Further investigation on the cash disbursement process, the team also found that the cash payment for daily expenses such as minor office supplies, postage and taxi fares are made without control. Furthermore, it was made without proper authorization by the senior account assistant or the accountant. The cash for payment are taken from cash collected available in the safety box by Ms Lamya. She will usually advance the companys cash to staffs to make the payment for the daily expenses, and will ask for receipts as a proof of payment. She records the payment in the cash book every day. Ms Alyia will verify the payment transactions in the cash book every week without a thorough checking. At the end of each month, the company will receive a monthly bank statement. Upon received of the bank statement, Ms Alyia will adjust the cash book balance according to the balance shown in the bank statement. She did not carry out further investigation to reconcile the balance shown in the cash book with the balance shown in the bank statement. She is confident that the bank statement will always show the correct cash balance and there is no way the bank will make an error.

Required:

As an accountant of Zoulman Bhd, prepare a report to evaluate the cash handling system and the cash recording process in the company. Identify any strength(s) and weakness(es) in the existing process. Include in the report your recommendation(s) on how to improve the cash handling system and cash recording process in the future. Address the report to the top management of Zoulman Bhd using a proper report format.