Many organisations need small amounts of cash to obtain items such as stamps and stationery at short notice. One way of ensuring that money is always available is to keep some in a petty cash box. The total amount in the box is usually between £50 and £100, and most of the expenses are £10 or less. To keep track of such expenses and to prevent employee theft, organisations generally deploy four petty cash procedures.
Unrestricted employee access to a petty cash box could lead to confusion and the loss of money. A control procedure imposes a secure system of petty cash activity by giving a petty cashier responsibility for managing the cash box. A petty cashier's duties of control include storing the petty cash box under lock and key, maintaining blank petty cash vouchers and a petty cash book, and liaising with an organisation's head cashier and auditor as necessary.
A disbursement procedure provides evidence of money paid out from petty cash. An employee who asks for money to cover an eligible expense must complete and sign a reimbursement voucher and supply a receipt. The petty cashier attaches the voucher to the receipt and reimburses the employee with the appropriate cash sum. The petty cashier then writes the date, item purchased and amount in the petty cash book and places the voucher, receipt and book in the petty cash box.
A funding procedure replaces money that a petty cashier has paid out. The petty cashier adds the amounts on the vouchers and places the total on a reconciliation form together with the total of the remaining cash. An Accounts Payable supervisor checks and authorises the reconciliation form and makes out a cheque to the value of the vouchers' total. The organisation's cashier turns the cheque into cash and gives this to the petty cashier who notes the amount received in the petty cash book.
A petty cash discrepancy occurs when a petty cashier finds that the sum of money in the petty cash box is not the same as the cash total given in the petty cash book. When this happens, the procedure is for the petty cashier to check each voucher against the corresponding amount written in the petty cash book and to confirm the total. If a discrepancy still exists, the petty cashier records the loss or excess in the petty cash book and passes this to a supervisor. The supervisor is responsible for resolving the matter.
- Bookkeeping for Dummies (UK Edition), Jane Kelly, Paul Barrow and Lita Epstein, 2011
- Understanding Cash Flow, Franklin James Plewa, Jr. and George T. Friedlob, 1995
- Financial Management, M. Richards, A. Smith, N. van der Meer and E. du Toit, 2008
- Foundations of Accounting, Daniel M. Kimuda, 2008
- Auditing and Assurance, Clifford Gomez, 2012
- Accounting Tools: Petty Cash Procedure
- Accounting and Finance Policies and Procedures, Rose Hightower, 2008
- Retail Operations (2nd edition), Angie Tang and Sarah Lim, 2008
- Stockbyte/Stockbyte/Getty Images