Question

Petty Cash is easily misappropriated if business processes and internal controls are not established and enforced. Provide and explain a minimum of four controls and/or concepts that will help a company ensure that its petty cash accounts are appropriately used and safeguarded?

Answer 1

Question:Provide and explain a minimum of four controls and/or concepts that will help a company ensure that its petty cash accounts are appropriately used and safeguarded?

Answer: In Big Organisations, Petty Cash system is adopted for small & negligible financial transactions of less financial importance. Still a System is developed to have a check, control of Small funds of the corporation to be used in petty cash system under which almost a fixed small amount is delivered to authenticated persons, or say Junior cashior to deal with such small payments/purchases. The said small amount can be misappropriated easily if business processes and internal controls are not established and enforced.

We can have the following controls.

Locked: The cash must be in key & lock firstly.

Authenticated person: There must be some authenticate person responsible for petty cash handlings.

Bills & Supportings: The personal handling cash must be responsible for propers bills & supporting for each payments.

Physical Check: On specified period, the seniors should check the cash physical at frequent interval.

Second authorisation: Immediate senior person may be added with the authority before payments of a big sum through petty cash.

Through all these concepts or policies, we may have proper controlling on petty cash transactions.