Petty cash funds are usually small funds of cash kept on hand for procurements or repayments and must be secured and documented to guarantee that thefts don’t arise. “Accounting for the petty cash fund involves recording transactions to (1) establish the fund, (2) recognize expenditures from the fund, and (3) replenish the fund as the cash balance becomes sufficiently low.” (Spiceland, 2013)
Two ways a business would maintain controls over Petty Cash (amongst others) are through:
1. Proper authorization - helps to deter inappropriate use of petty cash funds. Only certain individuals can make purchases of a certain amount as established by preset guidelines.
2. Employee management – help to ensure employees are aware of a firm’s internal control procedures, ethical responsibilities, and where to report incidences of misconduct. From my experience in retail it was important to perform opening and closing counts of petty cash and registers as well as retain receipts for any cash expenditure made for incidentals.
Before the store opened all registers and petty cash was counted by the lead cashier of the morning to ensure that petty cash was at its minimum amount and all cash registers started with the same amount of opening cash. These amounts were recorded by denomination for each register as well as…