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

ANSWER:

In big organisations, petty cash system is adopted for small &negligible financial transaction for lower 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 amount is given to authenticated persons,or say junior cashior to deal with such lower payment. the said lower amount can be misappropriated easily if business processes and internal controls are not establised 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.