38 HASKINS & SELLS May
Disposing of Cashed Checks
WHAT to do with checks that he has
cashed, is a problem which confronts
every custodian of a fund.
He may recash them at a bank. If part
of the fund is in bank, he may deposit them
in that account. If he has no bank account,
he may turn them over to the
cashier and obtain currency receipts in exchange.
Again, he may pass them to the
cashier, or the treasurer, receive credit
through the general cash, and subsequently
be reimbursed by a check drawn on the general
The practice of recashing checks at a
bank is frowned upon by auditors; but why?
Deferring the answer temporarily and
considering first the alternatives, two substitutes
are found for the admittedly, although
often unexplained, bad practice.
The custodian who has currency receipts
which must be deposited finds an easy
way out of having cashed checks for accommodation,
by substituting such checks
for currency in making his deposit, thereby
restoring his fund to a currency basis.
This procedure seems simple, convenient,
and orderly enough except for one consideration;
no trail remains of checks
cashed. Contrary to instructions that he
is not to cash checks, the custodian may
do so with little risk of detection, except
when his fund is verified by the auditors.
What is the objection to cashing checks?
Promiscuous accommodation of this character
is sure to result in loss. The risk of
such loss is minimized when the cashing of
checks is limited to certain persons prescribed
by those in authority.