CASBO Chief Business Official (CBO) Practice Test

Reducing cash handling risk hinges on strong internal controls that create checks and balances around every step of handling money. The best approach combines keeping cash under dual custody, regularly reconciling records with actual cash, having someone who is not involved in daily cash handling count cash independently, and enforcing secure cash handling procedures.

Dual custody means two people are involved in the key cash processes (for example, collecting, counting, and depositing). This separation makes it much harder for one person to misappropriate cash without being noticed. Regular reconciliations pair up what should be on hand and what the records say should be on hand, so discrepancies are detected promptly rather than building up unnoticed. Independent cash counts—performed by staff not directly handling funds—provide an additional check that the amount on the books matches what is physically present. Finally, secure cash handling procedures cover how cash is stored, secured, transported, and deposited, reducing opportunities for theft or loss.

When any of these elements are missing, opportunities for error or fraud increase. For instance, single custody with no reconciliations allows someone to both control and hide discrepancies; counting only at month’s end or relying on vague assurances without independent verification leaves large gaps between recorded and actual cash. The combined controls in this approach address both the likelihood of miscount and the chance of intentional misappropriation, which is crucial in busy cafeterias and stores with frequent cash transactions.