Question

Write a one-page paper describing petty cash procedures at your current or a past employer. Was petty cash handled tightly or loosely? How did employees view petty cash? If you have no experience in this, write your paper including policies and procedures you think should be followed. Choose a business (or make one up) and be creative in your paper.

Answer 1

Petty cash is the imprest money the employers hand over to an employee to spend on day-to-day business operations. Ideally, an employer would make a rough estimate of the immediate cash needs at the office for a pre-determined period of time and issue the imprest to the cashier, so that he/she manage the routine payments without having to make sudden withdrawal from bank.The same is reimbursed to the cashier after a fixed interval.

I worked in a finance company, that operated through multiple branches over different towns and cities. The branch would make cash disbursements to the new clients and collect instalment from those whose payment cycle became due on a particular day. The ordinary running expenses of the branch office included its stationary expense, refreshments of staff members, travelling allowances. The salaries, incentives, branch electricity bill and monthly premise rent were directly met by the head office though.

The petty cash issued for stationery, refreshments and travelling allowances by the head office to branch employees was very tightly handled. Some of the measures taken by head office to prevent its leakage as a part of its internal control policy were :-

1. Daily accounting of all the transactions fed into the company's software.

2. The branch cashier would reconcile the physical balance with system entry before day end

3. The branch was asked to produce vouchers for the expenses it showed on random basis.

4. After every fortnight, the remaining balance of imprest was asked to be deposited back to the head office and fresh cash was issued the next day, so as to confirm the genuinity of the accounting entries made by the branch.