Companies also need controls over cash disbursements. Since a company spends most of its cash by check or bank transfer (ACH, wire transfers, etc.), many of the internal controls for cash disbursements deal with the authorization process. The basic principle of segregation of duties applies in controlling cash disbursements. The following are some basic control procedures for cash disbursements:

• Make all disbursements by check or from petty cash. Obtain proper approval for all disbursements and create a permanent record of each disbursement. Many retail stores make refunds for returned merchandise from the cash register. When this practice is followed, clerks should have refund tickets approved by a supervisor before refunding cash.
• Require all checks to be serially numbered and limit access to checks to employees authorized to write checks.
• Require two signatures on each check over a material amount, ensuring that one person cannot withdraw funds from the bank account.
• Arrange duties so the employee who authorizes payment of a bill does not sign checks. Otherwise, the checks could be written to friends in payment of fictitious invoices.
• Require approved documents to support all checks issued.
• Instruct the employee authorizing cash disbursements to make certain the payment is for a legitimate purpose and is made out for the exact amount and to the proper party.
• Stamp the supporting documents as paid when liabilities are paid and indicate the date and number of the check issued. These procedures lessen the chance of paying the same debt more than once.
• Arrange duties so those employees who sign checks neither have access to canceled checks nor prepare the bank reconciliation. This policy makes it more difficult for an employee to conceal a theft.
• Have an employee who has no other cash duties prepare the bank reconciliation each month and discover errors and shortages quickly.
• Void all checks incorrectly prepared. Mark these checks void and retain them to prevent unauthorized use.