Internal control for petty cash(new)


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  • The slides are pretty good. The best part about the slides is how they explain each and every aspect of petty cash. This could easily be referred as "the back to school" presentation on petty cash. But keeping dockets and documents related to petty cash could get tedious and is not possible for everything. This is where Happay come in. Say 'bye bye' to kepping dockets, slipd and other documentation. With happy all you need is a smartphone. Happay cards are interlinked with an app and helps you keep real-time track of your transaction and much more. To know more follow this link
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Internal control for petty cash(new)

  1. 1. Economics and Finance Institute* Internal Control For Petty Cash SaSa Fashion Company
  2. 2. I. Introduction
  3. 3. * *The three primary objectives of effective internal control: * Reliability of financial reporting * Efficiency and effectiveness of operations * Compliance with laws and regulations
  4. 4. * *The method use: *Narrative *Flow chart *Internal control questionnaire
  5. 5. II. Policy and Procedures
  6. 6. 1. Introduction  Petty Cash Policy and Procedures document:  is issued on 1st August 2009  supersedes all other policies and procedures relating to petty cash currently in issue  is applicable to all employees of the company  Petty cash claims will not be reimbursed to self-employed persons
  7. 7. 2. Policy  Petty Cash may be used to reimburse for small items of incidental expenditure only  The maximum amount that may be claimed is $500
  8. 8. 2. Policy  The following items cannot be reimbursed via petty cash: • Travel and subsistence • Hospitality or entertaining • Uniforms • Telephone costs • Equipment
  9. 9. 3. Procedure  The working flow in the company is listed below:  Petty cash fund • The Manager should often review the amount in the fund to ensure that the amount is adequate • The money should be kept in a locked petty cash box under the control of the Petty Cashier
  10. 10. 3. Procedure  Petty cash expenses • Petty cash expenses must be related to legitimate company activities • The maximum limit for petty cash expenses is $500. Expenses over this amount must be paid by cheque • Casual wages are not paid out of the petty cash fund
  11. 11. 3. Procedure  Documentation required Employees: • Keep all dockets and/or receipts for petty cash expenses as proof of payment • Attach dockets and/or receipts to the back of the Petty Cash Voucher • Check at the point of purchase that dockets/receipts are clear and correct
  12. 12. 3. Procedure  Claims process Employees: • Complete a Petty Cash Voucher • Attach relevant dockets/receipts to the back of the Petty Cash Voucher • Obtain the supervisor’s authorization for amounts over $350
  13. 13. 3. Procedure  Claims process • Submit all claims to the Petty Cashier within seven (7) working days Petty Cashier: • Check the claim and reimburse the employee from the petty cash fund for the amount spent within two (2) days of the claim
  14. 14. 3. Procedure  Petty cash advances Employees: • Complete a Petty Cash Voucher if money is needed, in advance, to pay a company-related expense • Get the Manager’s approval for the advance • Give the Petty Cashier a docket/receipt for the money spent, as well as any change from the advance, within five (5) working days of receiving the money
  15. 15. 3. Procedure  Security Petty Cashier: o Keep the petty cash fund secure by: • not allowing other persons access to the petty cash box • locking the petty cash box when it is not being used • putting the petty cash box in a locked desk drawer during working hours
  16. 16. 3. Procedure  Security Petty Cashier: • putting the petty cash box in a safe place overnight o Do not issue funds from the petty cash fund unless a Petty Cash Voucher has been processed, in accordance with the above guidelines
  17. 17. 3. Procedure  Petty cash expenses Petty Cashier: • Check all Petty Cash Vouchers against dockets/receipts for accuracy • Check that all claims are related to the company’s business
  18. 18. 3. Procedure  Petty cash expenses Petty Cashier: • Check that all claims over $350 have been authorised by the employee’s supervisor • Pay approved petty cash claims promptly and accurately
  19. 19. 3. Procedure Petty cash expenses Petty Cashier: • Keep all Petty Cash Vouchers in the petty cash box until recorded
  20. 20. 3. Procedure Petty cash advances Petty Cashier: • Check that all petty cash advances are authorized • Pay out petty cash advances • Follow up petty cash advances if the docket/receipt for the expense is not submitted within five (5) working days
  21. 21. 3. Procedure  Petty Cash Book Petty Cashier: • Record all Petty Cash Vouchers in the Petty Cash Book at least weekly • Balance the Petty Cash Book fortnightly or when funds are running low • Check the balance in the Petty Cash Book against the amount remaining in the petty cash box
  22. 22. 3. Procedure  Petty Cash Book Petty Cashier: • Submit the Petty Cash Book and Petty Cash Vouchers to the Authorised Officer fortnightly and advise of any problems • Advise the Authorised Officer of how much money is required to reimburse the fund
  23. 23. 3. Procedure  Petty Cash Book Petty Cashier: • Advise the Authorised Officer when the amount in the petty cash fund needs to be increased
  24. 24. *Deficiency and type of control activitiesEffective internal control = Design and operate the policies and the procedures effectively
  25. 25. Deficiency Type of control activities should be strengthenOn last day of January, a copy Adequate documents andpurchase office supply receipt recordswas use to reimburse pettycash from petty cashier.Accountant, did the petty cash Proper authorization offund requesting instead of transaction and activities.petty cashier who areresponsible in preparing thisrequesting to petty cashcoordinator.On the surprise cash control of Physical control over assetspetty cash fund, the financial and recordmanager find the wrongamount between theremaining cash and therecord-balanced because thepetty cashier recorded thewrong number of one receiptpayment.
  26. 26. A Voucher that reimbursed to Proper authorization of transactionemployee on the last day of February and activities.was signed by financial officer.Petty cashier confused to reimburse Physical control over assets andtwice to one receipt in March 23rd. recordDue to the short of petty cash, Physical control over assets andfinancial officer agree to the recordrequesting $400 from petty cashier. Independent checks onBut the remaining of petty cash at performancethat time was $168. So, the pettycash will be up to $568.One receipt was found that an Independent checks onexpense item was English Grammar performanceBook, not involve with the company Adequate documents & recordsoperation. As a result, one staff usedpetty cash for his personal expense.
  27. 27. *IV. Comments *Require original receipts in order to disburse petty cash. Maintain the receipts in the petty cash fund box for reconciling. *The person to be reimbursed should indicate on the original receipt what was purchased, the business purpose, and account and fund to be charged.
  28. 28. *IV. Comments (con’t)*The original receipts should be approved and signed by an appropriate authorized individual.*The petty cash fund should not be used for personal benefit.*The Manager is responsible for regularly reconciling the petty cash fund
  29. 29. *IV. Comments (con’t)*A petty cash fund remains open on the records of the Accounting Services Department until you request it be closed. The Accounting Services Department performs an annual written confirmation of the petty cash account balances.
  30. 30. *IV. Comments (con’t)*Decide if you really need a petty cash fund. If not, contact the Accounting Services Department to close the fund.*Provide the enough documents and reasons for the shortage of petty cash fund.
  31. 31. *IV. Comments (con’t)*Return the petty cash fund to the financial official in case that the reimbursement amount is over the petty cash set ($500).*The petty cashier should be more independent on his or her obligation.
  32. 32.  V. References *Ms. Chea Yana, Manager of Lux Fashion Company Email: Tel: 012 348 999 * Auditing and Assurance Services, Prof. Elder/ Beasley/ Arens, 12th Edition, Publish in 2008
  33. 33. *