Controls for Petty Cash (#169)
/In this podcast episode, we describe a range of controls for petty cash. Key points made are noted below.
The Need for Petty Cash Controls
Petty cash is easy to steal, and so requires the use of several controls.
Possible Petty Cash Controls
You could eliminate petty cash entirely and replace it with corporate credit cards or an employee reimbursement system.
Reduce the number of petty cash boxes being used.
Limit individual petty cash transactions to a maximum amount, with all other reimbursements going through accounts payable.
Reduce excess cash balances. Ideally, each petty cash box should be drawn down entirely about once a month.
Force some types of transactions over to accounts payable, where they are more visible to management. Examples are employee advances and reimbursements for parking tickets.
Bolt the petty cash box into a drawer or just use a locked cash drawer; otherwise, the entire box may be stolen.
Ensure that petty cash plus receipts equals the total authorized amount for each petty cash box. Use unscheduled audits to enforce this, which may include additional spot training.
Give petty cash custodians a training class on how to use it, and also put a laminated petty cash procedure sheet in each petty cash box.
Write all petty cash receipts in ink, so that they cannot be altered.
Track who is being reimbursed the most; could indicate who is submitting duplicate receipts for reimbursement.