Question

1. Explain why the Petty Cash Fund and the Patient Trust Fund

should be reconciled each month and that the reconciliation

be done by someone other than the person responsible

for maintaining the funds.      

Answer 1

Petty cash reconciliation is the process of verifying transactions involving petty cash funds. Its purpose is to ensure that funds are being used appropriately. It is an important internal control for fraud prevention.

Here are five steps to reconciling petty cash:

1. The petty cash reconciliation process starts by counting up the amount of cash on hand at the end of the financial period and using this as the ending balance for the petty cash account.
2. Next, receipts are reviewed and verified as appropriate and complete.
3. Each receipt is logged as a withdrawal from the petty cash fund. The ending balance should be equal to the beginning balance that was carried over from the previous period plus any additional cash deposits–less the sum of all withdrawals.
4. When discrepancies occur, investigation is required. This can involve examining who had access to funds, looking for missing receipts, and tracking down undocumented deposits.
5. In cases where discrepancies are the result of fraud, additional internal controls are designed to prevent further occurrences.

   Patient Trust Fund should have

1. Enter a statement Date.

2. Enter a Statement Balance which will be the closing balance based on the statement date.
3. Using the trust bank statement, compare and match the transactions listed on the bank reconciliation by clicking on the tick or the line of the transaction.
4. Continue matching until you have marked off all items on the bank statement.
5. When the variance is nil, click on the Reconcile button to reconcile your trust account.