How to Audit a Debit Card
Cash flow is important for businesses needing capital to pay for the various expenditures relating to running an organization. Most companies will use bank accounts to help manage their financial resources. Banks typically offer a debit card linked to a customer's bank account, which allows the customer to use the card for making purchases. Audits are internal or external reviews of a company's information. Business owners and managers will use these audits to ensure that no improprieties exist in their companies' information or processes. Cash or bank audits are among the more common audit types in business.
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Things You'll Need
- Bank statement
- Accounting ledger
- Accounting system
- Financial information
Instructions
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Interview management about the use of debit cards. Companies typically place restrictions on the number of employees who can use the debit card. The authorization process and dollar limit for purchases is also important information gleaned from this meeting.
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Compare several months of bank statements to corresponding general ledger information. This step allows auditors to review and reconcile the debit card transactions between these two documents. Auditors will ensure that all general items clear the bank and no outstanding items are in the ledger for continual months.
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Review individual receipts. Most businesses keep receipts for business purchases for tax purposes. Auditors can select a sample of these receipts to ensure the company does not allow personal purchases with business funds.
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Test internal controls. Internal controls are the safeguards a company implements to protect its financial information. Auditors will ensure that companies have adequate controls that do not allow theft or fraud from employees who post debit card transactions, which can distort the company's financial information.
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Tips & Warnings
Debit cards are typically less frequently used than credit cards, making it easier to plan the audit process. Fewer auditors may be needed to review this information.
Failing to audit cash accounts and debit transactions can make it difficult to assess how well a company generates capital for paying expenditures. Banks and lenders need this information when making loans to companies.
